Restricting promotions of food and drink high in fat, sugar or salt: consultation

Section 5. Exemptions to restrictions

Summary of our proposals

We propose, as a minimum, that specialist businesses with a limited product range, such as chocolatiers and sweet shops, would be exempt from location restrictions.

Restrictions on price promotions, as set out in section 2, would still apply to specialist businesses.

Exemptions from location restrictions

129. The food business landscape is incredibly diverse. The restrictions we are considering would apply to many different outlets of various sizes and layouts, selling a wide range of products. While this would not have a material bearing on many of the proposed restrictions, it could affect the ability of some businesses from complying with some location restrictions (at checkouts, end-of-aisle etc.). For example, a small convenience store could comply with price promotion restrictions but might struggle to comply with location restrictions due to the size of the premises.

130. In considering whether there should be any exemptions, we will be guided by the following key principles:

• Implementable: can the exemption be implemented in a proportionate way
• Meaningful: the exemption does not undermine the overall aims and benefits of the policy.

131. In our previous consultation, we sought views on exempting businesses from positioning restrictions (in relation to displays at end of aisle, checkouts etc.) on the basis of there being no reasonable alternative to displaying foods elsewhere. This was suggested to reflect the fact that in some stores, primarily small businesses, the display of foods in particular locations may simply reflect the realities of the physical size or layout of the premises or the limited product range (for example, chocolates being sold in a chocolatier).

132. Feedback to this proposal was mixed. Industry organisations who provided a response were mostly in favour of the proposed exemptions. Non-industry organisations and individuals both had mixed views. Concerns were expressed around whether such an exemption could create a loophole which could undermine implementation, for example, by stores purposely implementing layouts that would meet the criteria for the exemption. Concern was also expressed about the potentially disproportionate impact of the proposals on smaller businesses which could limit their ability to compete with larger businesses.

UK Government regulations for England

133. The UK Government has set out in its regulations exemptions for certain businesses within scope of the restrictions. In summary, these are as follows:

• Micro and small businesses (fewer than 50 employees) will be exempt from volume price restrictions (multi-buy, "extra free", unlimited refills)
• Micro and small businesses (fewer than 50 employees) will also be exempt from location restrictions
• Premises smaller than 185.8 square metres (2,000 square feet) (even if they are part of a medium or large business with 50+ employees) will be exempt from location restrictions
• Specialist retailers that sell one type of food product category (e.g. chocolatiers or sweet shops) will be exempt from location restrictions.

134. Further information on the definitions for these exemptions is set out in the UK Government regulations, explanatory memorandum and implementation guidance.

Welsh Government

135. The Welsh Government propose in their consultation paper to follow the approach taken in UK Government regulations and outlined above.

Our proposals

136. Regarding exemptions, there are several considerations. To maximise the health impact and support our aim to reduce the health harms associated with the excess consumption of calories, fats, sugars and salt, restrictions need to apply to as many businesses as possible. There is also a clear desire for restrictions to be implemented as widely as possible so as to create a level playing field. We recognise that there are challenges for smaller businesses. The business impact of any proposed exemptions will need to be considered alongside the potential health impacts. For example, excluding small and micro businesses from the policy could limit the positive impacts of the policy, due to the large proportion of such food businesses (based on employee number) in Scotland.

137. We also need to take into account our proposed approach to apply restrictions to sales of pre-packed targeted foods (and non-pre-packed soft drinks with added sugar in respect of unlimited refills for a fixed charge). We recognise that the impact of the policy will vary depending on the extent to which a business in scope sells pre-packed targeted foods.

138. Taking these considerations and feedback to our previous consultation into account, we propose, as a minimum, that specialist businesses with a limited product range, such as chocolatiers and sweet shops, would be exempt from location restrictions. Restrictions on price promotions would still apply to these businesses, both in-store and online.

139. Further to this, and in view of the exemptions set out in the UK Government regulations, detailed at paragraph 133, (which Welsh Government are also proposing to apply) we are also seeking views on exempting businesses from location restrictions on the basis of employee number and/ or floor space. In doing so, we recognise that smaller businesses may have limited (or no) scope to comply with location restrictions, for example, a small convenience shop or kiosk. We will also consider the criteria set out in the UK Government regulations and explore the scope for consistency where appropriate, alongside the feedback we receive to this consultation.

Products close to expiry

140. In our previous consultation, we sought views on whether a targeted food marked as discounted because it is close to expiry should be exempt from location and promotion of value restrictions. This issue was explored after some responses to our 2017 Diet and Healthy Weight Delivery Plan consultation highlighted that this practice helps reduce food waste.

141. Feedback on the proposal was mixed. In relation to exemptions for foods close to expiry from location and promotion of value restrictions, non-industry organisations respondents had mixed views. Industry respondents either agreed with the proposals or offered no view. Individuals had mixed views. Specific feedback in favour of an exemption centred around supporting practice to help reduce food waste and align with other commitments around reducing waste. Views against an exemption included that this might be used to circumvent restrictions with expiry dates deliberately shortened on targeted foods. Others highlighted that targeted foods should be restricted regardless of whether close to expiry or not.

142. As we are no longer pursuing promotion of value restrictions, an exemption for targeted foods close to expiry on that basis is no longer applicable. Should we pursue restrictions on TPR, products close to expiry would not be within scope of such restrictions as any discount applied to foods close to expiry would be permanent before the product is sold or removed from sale.

143. In relation to location restrictions, having considered the feedback we received, we do not intend to pursue an exemption for targeted foods that are close to expiry from location restrictions. An exemption on the basis of location is not considered necessary as there remains sufficient scope throughout the supply chain to allow businesses to take action to reduce food waste. For example, products close to expiry would still be able to be displayed in alternative areas of the store such as in-aisle. In addition, there remain opportunities to reduce food waste higher up the supply chain. An exemption for products close to expiry could also inadvertently create a loophole which could undermine our proposed restrictions on the positioning of targeted foods from prominent locations in-store, as discussed at paragraph 108. We know that businesses respond to restrictions on some promotions by changing their marketing tactics^[46].

Questions

Question 17 - Do you agree with our proposal to exempt specialist businesses that mainly sell one type of food product category, such as chocolatiers and sweet shops, from location restrictions?

Yes/ No/ Don't know

Please explain your answer.

Question 18 - If exemptions are extended beyond our proposal to exempt specialist businesses that mainly sell one type of food product category, should exemptions be applied on the basis of:

Number of employees – Yes/ No/ Don't know

Floor space – Yes/ No/ Don't know

Other (please specify)

None

Don't know

Please explain your answer.

Question 19 - If you agreed in question 18 that businesses should be exempt from location restrictions based on number of employees, what size of business should be exempt?

All businesses in scope of restrictions, i.e. no exemptions based on employee number

All in scope except businesses with fewer than 10 employees (micro)

All in scope except businesses with fewer than 50 employees (small and micro)

All in scope except businesses with fewer than 250 employees (medium, small and micro)

Other – please specify

Please explain your answer.

Question 20 - If you agreed in question 18 that businesses should be exempt from location restrictions based on floor space, what size of business should be exempt?

Less than 93 square metres (1000 square feet)

Less than 186 square metres (2000 square feet)

Less than 279 square metres (3000 square feet)

Other – please specify

Please explain your answer.

Question 21 - Are there any other types of exemptions that should apply?

Yes/ No/ Don't know

Please explain your answer.