Promotions ‘have to fall to meet sugar targets’

11-May-2017 - Last updated on 12-May-2017 at 13:04 GMT

Promotions account for 40% of all food and drink spending

Food and drink promotions will need to reduce if the industry is going to meet sugar reduction targets set by Public Health England (PHE), the boss of a market intelligence firm has warned.

In addition to PHE’s three approaches for manufacturers to meet the targets – lowering sugar levels, reducing product size and pushing healthier products – pricing was “the fourth spoke in the wheel”, said IRI UK md Dan Finke.

Food and drink suppliers needed to behave responsibly, which probably meant a change in the pricing and promotional regime, Finke suggested. Promotions accounted for 40% of all food and drink spend in the UK, he added.

“Even though government has stopped short of legislating against the use of promotions, it is clear that use of promotions will need to reduce as they increase the amount of food and drink people buy by around one-fifth,” Finke said.

‘Promotions will need to reduce’

PHE published a report at the end of March, challenging the UK food industry to reduce sugar content by 5% by August 2017, and 20% by 2020.

The report – Sugar Reduction: Achieving the 20% – set recommended sugar limit guidelines for nine food groups. If targets were met, about 200,000t of sugar would be removed in the UK every year by 2020, PHE said.

Finke acknowledged that retailers had to play their part too, as even though suppliers had been reducing promotions to help offset rising costs, average basic product pricing across all supermarkets had not risen in three years.

“As Marmitegate highlighted, manufacturers can recommend pricing for their products to retailers, but can’t control how much the retailers sell for,” he said.

Innovation was also important

Innovation was also important, Finke claimed.

“Our analysis shows that, in the UK, high sugar products are still a major contributor to new product development despite an increase in demand from shoppers for healthier food alternatives … Suppliers need to work harder to respond to changing consumer trends.”

Clive Black, analyst at stockbroker Shore Capital, claimed the food industry was “nudging behaviour and adjustments to promotions” alongside product reformulation and product positioning in stores.

“Time will tell if regulators more directly intervene,” Black added.