Restricting promotions of food and drink high in fat, sugar or salt: business and regulatory impact assessment - partial

6. Scottish Firms Impact Test

The programme of engagement with businesses is set out in Section 3.2 Public Consultation. This engagement was held following publication of the 2022 consultation, to allow for discussion of the proposals as set out in the consultation paper. Meetings with business stakeholders were structured by topic as set out in the table below. For each topic, an overview of the policy proposals as outlined in the 2022 consultation was provided by a Scottish Government official and businesses were invited to comment on the potential business impacts.

The outputs of this programme of engagement are summarised below

Food Categories

a. Types of foods to be targeted

An overall theme across all sessions was a strong preference for the same food types to be targeted as are set out in the UK Government regulations in England.

Businesses noted that significant investment has gone into establishing IT systems and other processes for the introduction of regulations in England and that were different food types to be targeted in Scotland then this would require rework and additional expense for businesses.

b. How to define HFSS foods

There was a consistent preference from businesses for the 2004/05 NPM to be used to define whether or not a food is HFSS. On the grounds that this would be consistent with the approach taken in England and that businesses have invested significantly in reformulation based on 2004/05 NPM.

c. Pre-packed and non-pre-packed

Businesses again tended to favour consistency with regulations in England which target pre-packed foods.

Some business stakeholders noted that the proposals could disadvantage retail over the out of home (OoH) sector (in particular takeaway), as the OoH sector tends to provide more non pre-packaged HFSS food.

Price Restrictions

a. Multibuys

A general theme was a desire for consistency with regulations elsewhere in the UK.

Meal Deals:

Comments on multi-buy restrictions tended to focus on the potential for meal-deals to be restricted, with business stakeholders in general not being in favour of a restriction of less healthy meal deals. The reasons given included perceived negative cost implications for consumers in Scotland and the associated impact for those suffering financial hardship. The proposals to restrict meal deals were also noted as having the potential to give competitive advantage to fast food outlets should the proposals target prepacked food only.

The evidence base around Meal Deals was an area questioned by business. A blanket approach to the variety of meal deals etc breakfast, lunch, dinner was not supported by business.

b. TPRs

Business stakeholders were in general strongly opposed to the restriction of TPRs, given their view that these are the most utilised promotion type.

Businesses were of the viewpoint that TPRs are designed to offer and deliver value for customer purchases rather than encourage volume purchasing.

Business cited TPRs as a necessary tool when products are going out of date to reduce wastage.

Business stakeholders raised concern that restrictions on TPRs would be difficult to define and enforce. Some business stakeholders raised the concern that TPRs would leave convenience stores at a competitive disadvantage compared to larger supermarkets given their limited budget to differentiate themselves from competitors.

Location Restrictions

Businesses highlighted the importance from their viewpoint of consistency with restrictions elsewhere in the UK. This was with regards the definition of location restrictions and what locations should be targeted.

The cost of reformatting stores to comply with location restrictions was highlighted by business stakeholders as one of the most significant costs of the proposals.

Businesses were encouraged to provide data to support these costs.

Other comments raised by some business stakeholders were a desire for seasonal exemptions from restrictions and that location restrictions would be particularly challenging for smaller format stores.

Exemptions

a. Floor space

Views on exemptions were more varied amongst different business stakeholders, with some businesses keen on a ‘level playing field’ with limited exemptions.

An exemption for stores less than 3000 ft was suggested by some stakeholders on the basis that smaller format stores would struggle to adapt to location restrictions.

It was noted by business with mixed use stores that attention should be paid to ensure that floor space definitions are on the basis of floor space that can be practically used for food and drink sales and display.

b. Employee number

In general business indicated, floor space was a better basis for exemptions than employee number.

Implementation

a. Timescales

Businesses noted that achievable implementation timescales would be dependent on the level of alignment with restrictions elsewhere in the UK.

b. Guidance

Businesses were keen for early and pro-active engagement on guidance. The importance of learning from the experience of the UK Government was a strong theme that came through during engagement with businesses.

c. Enforcement

Businesses were generally content with proposal that local authorities (Environmental Health Officer and/or Trading Standards) would enforce proposals.

Industry Specific Concerns

a. SRC/large retail

Deviation from UK Government regulations was a major concern for large retailers.

b. FDFS/manufacturers

Deviation from UK Government regulations was a major concern for manufacturers.

Use of the 2018 NPM would be a big concern for manufacturers.

c. SGF/mid-small retail sector

In consideration of business exemptions the threshold should be increased from 2000 sq ft to 3000 sqft to take into account the challenge of store reconfiguration in line with location restrictions.

In addition to the above, Section 3.2 sets out a series of focused roundtables events that took place in 2023. As the next step in the consultation process these sessions allowed for further focussed discussion on areas of the policy that have generated significant feedback form stakeholders, specifically meal deals, TPRs and business exemptions. In the context of our aim to reduce health inequalities we wanted to understand as far as possible the business impacts (including unintended consequences) of these aspects of the policy alongside the public health impacts. Roundtable events followed a similar structure. Attendees received background information and set questions in advance to facilitate focused discussion. Each area of focus was discussed in turn and businesses were invited to comment on the potential business impacts.

Outputs are summarised in the table below:

Meal Deals

Views expressed as part of the roundtable discussions for the most part mirrored and reinforced engagement on and feedback to our 2022 consultation.

In general, business stakeholders:

• Found it difficult to comment fully on proposals when the categories within scope of the policy have not been set out.
• Raised concerns around the IT infrastructure needed to support meal deal restrictions and subsequent pass through cost to customers
• Considered meal deals to be a planned and not impulse purchase and as such were not in support of inclusion within scope of the policy
• Raised issue of displacement i.e making meal deals more expensive in retail can drive purchase to less healthy out of home
• Not supportive of differentiation between lunch and evening meal deals

TPRs

Views expressed as part of the roundtable discussions for the most part mirrored and reinforced engagement on and feedback to our 2022 consultation.

Manufacturing and Wholesale RoundTable:

• Considered TPRs an important tool used to differentiate in a crowded market. An important point of difference. TPRs were considered a red line by all membership bodies in attendance
• Considered Scottish (and Welsh) producers were at risk of being isolated should TPRs be within scope - they would struggle to compete with larger, well known brands without TPRs

Retail:

• Stated TPRs are designed to offer value and encourage brand switching to customers rather than drive volume purchasing. Important tool to differentiate between brands.
• Consider TPRs an important tool used to differentiate between brands in a crowded market.
• TPRs were considered a red line by all membership bodies in attendance.
• Questioned if restrictions on TPRs are an appropriate measure during a cost-of-living crisis.

Business Exemptions

Views expressed as part of the roundtable discussions for the most part mirrored and reinforced engagement on and feedback to our 2022 consultation.

Overall there is a preference for alignment with England on exemptions.

Manufacturing and Wholesale RoundTable:

• Questioned practicalities of locations restrictions in smaller stores and suggested the threshold for business exemptions should be increased to 3000sq ft

Retailers:

• Some questioned practicalities of locations restrictions in smaller stores and suggested the threshold for business exemptions should be increased to 3000 sq ft – which is in line with Sunday trading laws in England.
• suggest that independent convenience stores that operate under a symbol group banner (e.g Spar, Londis etc) should be considered individual, independent small stores for purposes of calculating employee numbers for the business.
• Larger retailers questioned rationale for exempting smaller outlets from price volume restrictions.

The outputs from the roundtable events have been used to help further inform the 2024 consultation on the detail of proposed regulations.