A new report, developed by the FDF in partnership with business management consultancy Argon & Co, has found that ongoing regulatory uncertainty could be holding back investment from some of the UK’s biggest food and drink manufacturers.
Drawing attention to what it describes as the UK’s “unusually cost-heavy market”, the report found that more than two-thirds (69%) of respondents believe greater regulatory certainty is critical when deciding whether to support healthier product innovation.
Every manufacturer interviewed for the report highlighted the disconnect between government “erratic” policy cycles and the long-term planning needed to make multi-year investment decisions.
This includes divergence in regulation across the UK’s nations and concerns over shifting benchmarks. The government is currently consulting on changes to the model underpinning advertising and promotion restrictions, the Nutrient Profiling Model (NPM), shortly after the latest set of regulations was finalised.
The FDF’s report also spotlights the time and cost pressures associated with making products healthier, with larger firms reporting that reformulation can cost up to £5 million per project.
Many of these costs extend beyond ingredients and testing, covering skilled staff time, marketing and production downtime.
One business reported that simply changing packaging to reflect a healthier recipe could cost up to £500,000 due to packaging and artwork write-offs.
Making products healthier also does not guarantee a return, manufacturers warned, with more than two-thirds (69%) having had a reformulated product either fail to reach launch due to consumer feedback or be removed from shelves by retailers after launch.
A similar proportion (63%) reported lower-than-expected sales, making products less commercially viable.
Due to these “cost-heavy” conditions, some producers said they are diverting investment in product innovation away from the UK.
As a result, the FDF is urging the government to commit to maintaining regulatory stability for five to 10 years and to pause any plans to change the Nutrient Profiling Model.
“You only have to look around a supermarket to see the food and drink industry’s commitment to offering healthier options to UK shoppers,” said FDF chief executive Karen Betts.
“This is in spite of the fact that, as with any cutting-edge innovation, many of the new products that companies trial don’t actually succeed. But industry’s commitment is being undermined by government proposals to change regulations that have only just come into force. Companies need regulation to stay in place for at least five years if they are going to invest in new products to meet it.”
She continued: “And it’s not just the pace of change that’s the problem, these latest proposals take little account of what’s actually possible in practice. So instead of driving more healthier products onto the market, government will actually drive companies away from making what are risky, multi-year investments. That’s bad for consumers, bad for our diets, bad for British business and bad for the economy.
“Government and industry agree that we need to support consumers in making healthier choices and in tackling obesity. Rather than moving the goalposts, undermining business confidence and good faith investments by businesses, government should instead work with us to make real-world progress.”
