The research found that greater regulatory certainty would help drive further investment in new, healthier products among the UK’s food makers. More than two thirds (69%) of respondents said that greater regulatory certainty would support their ability for further healthier product innovation projects.  

FDF reported that every manufacturer interviewed highlighted the disconnect between Government’s erratic policy cycles and the long-term planning they need to make multi-year investment decisions. This includes divergence in regulation across the UK’s nations and concerns over shifting benchmarks. For example, Government is currently consulting on changing the model underpinning advertising and promotion restrictions (the Nutrient Profiling Model), just months after the latest set of regulations came in.

Reformulation is a costly investment

Large businesses revealed that the cost of reformulation can cost up to £5 million per project. Many of these costs go beyond the direct costs of ingredients and testing, covering skilled staff time, marketing and production downtime. One business shared that simply changing packaging to reflect a healthier recipe change could cost up to £500,000 due to packaging and artwork write-offs.

However, FDF highlighted that even with multi-million-pound investments, manufacturers are not guaranteed a return. More than two thirds (69%) have had a reformulated product either not reach launch stage, due to feedback from consumers, or taken off shelves by retailers after launch. A similar number (63%) have had lower sales than expected, making products less commercially viable.

Investment diverted from UK market

Due to these “unusually cost-heavy conditions”, some manufacturers are diverting investment in product innovation away from the UK to other markets. FDF is urging the Government to stop frequent changes in regulation to ensure that businesses’ plans to invest in healthier products are matched by a “supportive and enabling” regulatory environment.

It said that this must start with pausing plans to change the Nutrient Profile Model, which has already caused businesses to pause new investment plans, to restore business confidence to make major investment commitments in healthier product innovation.

FDF and its members have urged Government to commit to regulation remaining stable for five to ten years, which it said is necessary to ensure sufficient stability and confidence for businesses to invest against them. FDF said Government should also support industry with a collaborative public health campaign, to help nudge people towards healthier choices, ensuring investment made in developing these options doesn’t go to waste.

“Companies need regulation to stay in place for at least five years if they are going to invest in new products to meet it.”

Karen Betts, chief executive of the FDF, stated: “You only have to look around a supermarket to see the food and drink industry’s commitment to offering healthier options to UK shoppers. 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. 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.”

James Watson, partner and head of UK manufacturing at Argon & Co, went on to say: “We were delighted to collaborate with the FDF and its members on this topic – the passion from members really came through in the discussions. There’s no shortage of desire to produce healthier food, but the risks and costs of reformulation coming on top of a few very challenging years is pushing suppliers to the brink, particularly for the smaller businesses. If pushed too far suppliers will simply stop investing in these products, undoing a lot of the good work in recent years.

“Instead, a more holistic review of the system should be undertaken, which should include consumer education and setting up positive incentives for suppliers.”

According to FDF, the research demonstrated ambition form industry to support healthier diets, pre-dating Government regulation.

While 81% of respondents have reformulated products and half (50%) have increased innovation in response to regulation, manufacturers are also investing in healthier products in response to consumer preferences and health trends, their own health commitments, and retailer expectations. As a result of this investment, FDF found that its member products now contain 18% less salt, 19% less sugar and 17% fewer calories than in 2021.

The body also recently revealed that five food and drink manufacturers have committed to reporting on healthier food sales from next year, in order to evaluate regulation and guide future policy. FDF is calling for Government to bring forward its proposals to make reporting of healthier food sales mandatory across the whole food system to provide a consistent, transparent way of tracking progress towards healthier diets.