The Easter weekend – and the tradition of indulging in chocolate and sweet treats – shone a light on HFSS legislation and the UK’s health challenges. According to Circana, more than 90 million units of seasonal chocolate, including Easter eggs, are sold annually in the UK.
A further crackdown now looks to be on the cards. Scotland’s proposed HFSS legislation has gone beyond England’s, and lobbyists are advocating for a 24-hour advertising ban on ultra-processed and HFSS foods. So how do manufacturers navigate HFSS legislation and drive business growth? And how do they do so without exacerbating the nation’s health outlook or inviting more punitive measures?
HFSS legislation creates a clear sales challenge for manufacturers. In many of the largest HFSS volume-contributing categories, non-compliant products have significantly higher rates of sale (ROS) than their healthier alternatives.
For instance, in sweet biscuits, Circana’s EPoS data reveals non-compliant products sell 1.8 times more volume per point of distribution than compliant ones. In crisps and snacks, the ratio is 1.9, and in chocolate, it’s 2.8. Only in carbonates is the ROS for non-compliant and compliant products much closer, at 1.1.
In carbonates, manufacturers have introduced healthier alternatives that rival the appeal of their less healthy counterparts. Ultimately, this is the game-changer for manufacturers to drive growth and improve public health.
However, appetising healthier products may still not be enough to reverse the trend of growing levels of obesity across the nation. The Health Survey for England reveals a strong correlation between high levels of obesity and obesity-related illness with socio-economic deprivation.
Increased obesity rates contribute to decreased levels of exercise, creating a vicious circle. Given the economic roots of obesity, competitively pricing healthier products becomes essential. With changing consumption habits, manufacturers will narrow the gap in ROS between compliant and non-compliant products.
But this transition process will take time, and during this period, manufacturers must continue to drive growth while simultaneously managing the effects of HFSS legislation.
This is tricky. Compliant products with a lower ROS on shelf will yield a lower ROS from display promotions. Meanwhile, their non-compliant counterparts suffer from their exclusion from efficient in-store display locations, such as gondola ends and lobbies. The combined effect is to reduce sales, making it more challenging for manufacturers to grow.
With economic recovery at an early stage and volume sales flat, manufacturers are having to increase deal depths in non-compliant products to boost promotional uplifts and drive sales. It means these products will become more attractive to consumers, especially those less economically well off.
In this sense, HFSS legislation may well have the reverse impact of its intended outcome, increasing consumption of unhealthy products where obesity is most prevalent, undermining the very goals it seeks to achieve.
There is no simple fix to the problem of the growing levels of obesity in the UK, which is deeply entrenched in complex socio-economic issues. However, stricter HFSS legislation might backfire and could actually be counterproductive.
Restricting manufacturers to pricing as the only lever to drive growth in a fiercely competitive market risks fuelling the consumption of unhealthy products even more.
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