How ready is the food industry for the HFSS clampdown?

Food and drink bosses this week called on the government to delay the crackdown on HFSS promotions amid the pressure on supply chains caused by the war in Ukraine.

But The Grocer’s HFSS Clampdown Conference in London this week made plain another more than valid reason for delay: a shocking lack of industry preparedness for the looming ban.

New research from industry data giant GS1 UK, based on responses from 400 companies, suggests just one in three had assessed their products ahead of the deadline to see if they would be subject to the HFSS ban, with less than half reformulating existing products and around a quarter having not even considered it.

GS1 found only a third of companies surveyed were training staff on the new rules, while an alarming 20% were completely unaware of the restrictions coming into force.

Some 70% were unaware the restrictions will ban volume promotions as well as HFSS products in prominent positions such as aisle ends.

“We saw the same thing when Natasha’s Law came in,” says GS1 CEO Anne Godfrey. “Then, the industry had two-and-a-half years to prepare and still there came a situation when it was weeks until it came in and companies were saying they didn’t have enough detail.”

Don’t delay

Nevertheless, Godfrey argues it would be wrong to delay enforcement of the new rules. “I don’t think if we delayed it for a year the industry would be any more prepared. We have a situation where one in three of our 10-year-olds is overweight or obese, and as our survey showed there is huge public and business support for these regulations. I think we need to get on with it, but companies need to massively step up their preparation.”

But retailers and suppliers are not entirely to blame for the lack of preparedness. As presentations at the conference made plain, companies still have many unanswered questions, with the government still unable to provide guidance less than seven months ahead of implementation.

“There is still a lot of uncertainty,” said Amy Glass, FDF UK diet and health policy manager. “For example companies are finding it difficult to calculate the nutrient profiling model [used as the basis for products being designated as HFSS] as there is no standardised calculator.”

Businesses also need clarity on “vague” category definitions, and exemptions surrounding meal deals, she explained.

It’s understood that an unprecedented 1,200 queries filed before Christmas by the FDF, BRC and ACS as well as trading standards have still not been answered.

With “key elements of the new rules still not clear,” said IRI UK head of retail Jaime Silvester, “there’s not been enough time for retailers to test in a live environment, particularly due to retailers being held back by everything that’s happened with the supply chain, availability, and space restrictions from covid.”

IRI estimates the promotions ban could cost the industry £3bn in lost revenue.

“There is huge public and business support for these regulations”

And the ACS was also concerned about lack of clarity for independent convenience operators. “With only seven months left until the implementation of the biggest regulatory change to the sale of grocery products in England for a generation, there remains a huge amount of uncertainty for local shops, supermarkets and food suppliers,” the ACS wrote to the PM.

Last week in Prime Minister’s Questions, Boris Johnson suggested the industry was being “given more time” to adjust to the changes. But while new advertising rules may be delayed, meetings with health secretary Sajid Javid this week appeared to confirm that the new rules on promotions would go ahead, with supermarket bosses accepting they would have to act based on their assumptions around the unfinalised legislation.

Amid the uncertainty, IRI’s Silvester said supermarkets that prepare and trial now are likely to be in the strongest position when the restrictions come in in October, noting a significant increase in trials since the turn of the year.

Tesco has started rolling out healthier aisle end fixtures across some stores and introducing new ‘under 100 calories’ bays across a range of categories (p19). And Sainsbury’s has launched trials across a swathe of stores, including devoting aisle ends to in-store advertising instead of product displays, and adding promo bays.

“The most obvious solution is to replace restrictive space with compliant, healthier products,” says Silvester.

“In-store media addresses the loss of revenue from having less promotions, but also comes with the challenge as to what to do with the lost space, leading to rationalisation in the aisle as a result.”

IRI sees sales of cooking oils and vinegars, chocolate and confectionery and international foods as at risk if some products are removed from the equation, thanks to high incrementality and low substitutability. But it says other categories may see a benefit from product delistings, such as butter and spreads, where removing inefficient SKUs may result in trade-up.

It also warns of an expensive race for position in supermarket power aisles, with smaller companies likely to be squeezed out as major brands dominate.

Regardless of the impact, GS1’s research shows strong public support for a clampdown, with 68% of consumers agreeing with the new rules. 

Susan Jebb, FSA chair and professor of diet and population health at the University of Oxford said it was too late for the industry to turn back the clock.

And she has ominous words for anyone who thinks the promotions ban will be the last big challenge. “We’ve been doing trials which have looked at these policies – admittedly over short periods of time and a small number of categories – but I don’t think there is any chance it won’t work.

“The point is that none of these things are going to be enough. We will need to go further, however successful.”