The government has been warned it will face a “massive” backlash over the cost of living crisis if it tries to impose mandatory health targets on supermarkets.
Talks have begun with the industry and NGOs on how a system of targets would underpin Wes Streeting’s proposed healthy food standard, with the prospect that companies will be hit with massive fines if they fail to hit them.
The proposals so far have been heavily influenced by nudge body Nesta’s suggested model, which would see mandatory targets initially brought in for all major grocery retailers. The Nesta model, released in February last year, suggested the move could reduce obesity levels by almost a quarter.
Nesta has forecast its plans will cost £45m for retailers to introduce, with biannual costs of £3.3m for periodic product assessments.
However, it has also proposed enormous fines of up to 1% of annual turnover for supermarkets that fail to hit their targets, which would be based on the percentage of products that are deemed healthy under the soon-to-be-reviewed Nutrient Profiling Model (NPM).
With The Grocer revealing last week that ministers are pushing ahead with recommendations for the NPM to be toughened to define thousands more products as HFSS, concern has grown among industry leaders over the potential cost of the plan, as well as what they claim is the lack of a level playing field with other sectors such as out of home.
“NGOs and officials in DHSC are already looking at targets as they believe the government’s plans to bring in mandatory reporting on health in itself will not do that much,” one leading industry source told The Grocer,
“That’s why the debate has already moved towards targets, but this is potentially a big intervention in the free market, which is a huge issue for businesses.
“Whilst companies are not going to oppose targets at all costs, they are concerned about the implementation, and that they are done in a way that doesn’t have a huge impact on the market.and have a big impact on food prices.
“It has to be done in a way that works with the industry.
“There are real questions about how it will work, whether the data is sales-weighted, what NPM is used and whether it is targets with penalties, so if you don’t meet your targets you face huge fines.
“That cost burden is a massive concern for companies, which is why if this is imposed on businesses there is going to be a very bad reaction, because the government doesn’t understand the market like retailers, manufacturers and food-to-go players.”
Nesta has urged ministers to introduce a system of targets and potential fines which target the major retailers, and at a later stage come up with a system that could tackle the out-of-home sector.
However, the source told The Grocer that retailers would not accept a system of targets which focused only on supermarkets, or which ignores the out-of-home sector.
“There is a realism that the model is different for a company like Domino’s, for example, compared to that of a supermarket.
“There is an acceptance that the targets might not be set up the same way as for a typical supermarket, but everyone has to be included, that is really important.”
The source added: “I think there is an appetite from industry if there was a genuine co-design between industry and government, with input from NGOs, and everybody had a strong voice and it took into account what the impact would be for consumers, prices and the market.
“But it is the industry that knows what it will mean for their customers and will certainly know what it means for food prices.”
No comments yet