Incoming in-store HFSS restrictions could lead to ‘huge swings’ in category share

The government’s decision to delay some restrictions on the promotion of food and drinks high in fat, salt or sugar (HFSS) will “not necessarily lessen the challenges” for brands in “impulse” categories, such as biscuits, cake, ice cream and crisps, says FMCG analytics firm IRI.

Earlier this week the government announced it is delaying plans to ban multibuy discounts on HFSS products due to the cost of living crisis. The decision applies to buy one get one free (BOGOF) and ‘3 for 2’ offers, as well as restrictions on free refills for soft drinks.

The “unprecedented” global economic situation has also prompted the government to pause the ban on online paid-for adverts and pre-watershed TV ads promoting HFSS products until January 2024. The government claims the industry needs longer to prepare for the ad restrictions, while it promises to monitor the impact of the restrictions on the cost of living.

However, the government will be going ahead with its plan to introduce restrictions limiting the location of unhealthy foods in shops from October. The new rules mean less healthy products can no longer be displayed in key locations, such as checkouts, store entrances, aisle ends and their online equivalents.

At the moment there is very little off the table and the challenge lies in being prepared for a range of eventualities.

Chloe Humphreys-Page, IRI

The IRI’s head of UK marketing, Chloe Humphreys-Page, tells Marketing Week the government U-turn on volume restrictions will not necessarily mitigate the effect on brands in the HFSS sector in terms of sales and category share.

“Across all those affected, it is display restrictions driving this rather than the volume promotion regulations,” she says, adding that IRI research indicates chocolate will see the biggest impact.

Additionally, the lack of clarity around what layout changes retailers will introduce in response to the incoming restrictions is making it difficult for brands to prepare.

“There will be layout changes and this will vary dependent on retailer strategy, but we could see full aisles being removed,” says Humphreys-Page.

“At the moment there is very little off the table and the challenge lies in being prepared for a range of eventualities. Marketeers need to arm themselves with as much information as they can to stay abreast of retailer thinking.”

The impact on categories

The IRI has been involved with store trials experimenting with different layouts in preparation for the HFSS restrictions. Humphreys-Page says it is finding that “impulse” categories are indeed the most impacted in these stores.

We could see huge swings in category share as a result of the regulations.

Chloe Humphreys-Page, IRI

However, there are distinct differentiations within these categories. While the IRI saw overall chocolate category sales decline by -7%, some of the brands within the category “actually did really well”, she says.

She also cites the cereal category as one where there has been a wide variation in sales performances in HFSS trial stores versus control stores, ranging from +9% to -9%.

“If these differences in uplift continue to exist when retailers’ HFSS plans are rolled out across their estates come October, we could see huge swings in category share as a result of the regulations,” she says.

Humphreys-Page adds that consumers are responding differently based on the channel and the retailer, meaning that “any changes resulting from the new restrictions need to be more tailored than perhaps many would have thought”.

“There is no ‘one size fits all’ approach or answer, and there is unlikely to be based on indications so far. It’s vital, particularly with less than five months to go, that brands work collaboratively with retailers to ensure they’re well prepared come October,” she explains.

It is also important to remember there is “potential” for positive impact for those brands who are already non-HFSS, she points out, as healthier snacking options or soft drinks have the chance to take on promotional space in-store where they may rarely have had the opportunity to do so before.

Indeed, for cereal brand Weetabix it is “business as usual”, as all of its Weetabix-branded products are HFSS-compliant, the brand’s head of innovation and insight, Mark Perry, tells Marketing Week. ‘We’re not shying away from spend’: How Weetabix plans to build on 2021 success

However, he notes that the incoming restrictions will “pose a challenge” to the brand’s competitors when it comes to in-store promotion.

“HFSS-compliant products will have an advantage when it comes to securing those prominent front-of-store or gondola end marketing opportunities,” Perry says.

“Down the aisles though, all products will be able to advertise. So it will be interesting to see what happens as space becomes even more competitive.”

Response to the delay

Meanwhile, the 12 month delay to the ad ban has been welcomed by the advertising industry.

Advertising Association director of public affairs Sue Eustace describes the decision as “sensible”, and says it allows the industry to work with government on the most successful way to tackle obesity.

“We know from the evidence that an HFSS ad ban will not be the most effective route and we welcome the opportunity to look again at this legislation, and find the best way to a solution,” she says.Ad industry hits back as junk food ban gets go-ahead

ISBA director general Phil Smith also welcomes the change, saying the government has realised the current schedule left businesses with “no time to adapt to the final shape of the rules” and the restrictions threatened investment.

“At a time of low growth, it makes little to no sense to pile costs on advertising – an industry which is a key driver of Britain’s economic success. With the UK in the grip of a cost of living crisis and with the spectre of rising inflation, we need a total focus on supporting our food manufacturing and broadcast industries to grow and invest,” he says.

“Britain’s obesity crisis is a serious one which needs serious solutions – on physical activity, food education and tackling poverty. As we have done in the past, advertisers stand ready to work with government to play our part in tackling the actual root causes of the problem.”