In December last year, the UK government announced new regulations governing the promotion of products containing high levels of fat, salt and sugar. The regulations relate to product promotions by location, by volume price, and restrictions on HFSS TV and online advertising before 9 pm.
Due to the current cost-of-living crisis, and the pressure on families to afford food, a decision was later made to take a staged approach to implementation as follows:
- 1 October 2022 - The restriction of HFSS product promotion by location introduced
- 1 October 2023 - restriction of HFSS product promotion by volume price introduced
- January 2024 - Banning HFSS being advertised on TV before 9 pm and paid-for adverts online introduced
The new HFSS regulations have been a hot topic over the past few months. Despite early scepticism, with most believing the HFSS regulations will not be effective in reducing childhood obesity, early trials spearheaded by big brands including Unilever, Kellogg’s and Innocent, saw sales for HFSS products drop by 20% when the trial restrictions were in place. One month on since the restriction of HFSS product promotion by location was introduced, we explore the impact the restrictions are actually having across the industry since they came into effect on 1st October and what this means for New Product Development (NPD).
Are HFSS regulations working?
It seems that the early trials gave a good indication of what was to come, with reports of a reduction in HFSS product sales throughout October 2022. According to Reapp, one large confectionary supplier experienced a sales drop of 3.98% in October 2022 from October 2021. Despite this, the weekend before Halloween saw a 52.11% increase on Year-on-Year sales, demonstrating that regardless of the restrictions, consumer demand for HFSS products around key occasions such as Halloween, Christmas and Easter are unlikely to be wavered by restricted in-store placement.
Despite early success indicators showing a reduction in everyday HFSS consumption, the new product placement regulations have resulted in an increase in promotions in other not-so-healthy categories. As retailers reshuffle store layouts to comply with HFSS rules, they are faced with the dilemma of which products to put in their place, and it seems that many businesses have chosen alcoholic drinks to fill the now empty spaces at checkouts and aisle ends. It was reported that in October 2022 off-fixture displays promoting alcoholic drinks increased by 57% from October 2021. Additionally, retailers are increasingly finding new workarounds for the regulations by moving off-fixture displays to permitted areas.
Whilst it’s safe to say the new HFSS regulations are not without their flaws when it comes to effectively promoting healthier lifestyle choices, there are indications that the regulations are having a positive impact on everyday HFSS product consumption.
What do the HFSS regulations mean for New Product Develoment (NPD)?
In some cases NPD has been impacted, as the categorisation of HFSS products has limited recipe formulation for those who wish to escape the category – with 71% of UK sales at 16 of the largest food and beverage manufacturers generated by unhealthy products, this presents a huge challenge. Regardless of the financial implications on sales reported in the past month, it’s clear to see the significant impact the rules have had on NPD, with major players like Mars getting ahead of the game earlier this year to launch a first of its kind HFSS compliant chocolate bar the ‘Triple Treat’.
NPD teams may need to reformulate products to reduce salt, fat and sugar content to avoid restrictions on product marketing. In addition, NPD teams may need to develop new packaging designs that comply with the new regulations. The costs associated with these changes can be significant, and may impact the profitability of consumer goods.
Fat, salt and sugar all play a major role in the taste, shelf life and texture of consumer products. Food and drink manufacturers are now tasked with the challenge of ensuring altered HFSS compliant recipes do not compromise any of these aspects, most importantly taste. If consumers do not like the taste of reformulated products, then any financial or time resource spent on product alterations will have been wasted. So it's vital that reformulation is carefully considered to maintain the integrity of the original product.
It’s also important to note that the HFSS criteria has been carefully designed to prevent food and drink businesses from disguising HFSS products by adding a positive nutritional component such as fibre to the ingredients and marketing it as a nutritious product to outweigh the negative ingredients. NPD managers must work hard to reformulate entire recipes to reduce levels of fat, salt and sugar, before making any attempts to introduce healthier nutritional elements are made.
It’s clear to see that the new HFSS rules are presenting new challenges for businesses – particularly around compliance and making sure that their product portfolio is compliant with the new standards. In fact, on two store visits to Poundland on 3rd and 17th of October, The Grocer found the business to be in breach of the regulations, risking a fixed monetary penalty of £2,500.
Whether regulations will be strictly enforced, only time will tell, however the Trading Standards organisation CTSI revealed earlier in the year that there was insufficient funding for rigorous enforcement of HFSS regulations. If this is the case, we could see businesses becoming a lot more lax when it comes to compliance.
But for now, at least, many manufacturers are shifting their focus to recipe reformulation and new marketing techniques in order to combat curbed sales volumes, with more HFSS manufacturers likely to follow suit if they want to maintain a competitive advantage. With further HFSS regulations set to come into force in the next few years, the pressure is on.