Unstable health policy deterring food innovation investment, research finds

Greater regulatory certainty would help drive further investment in new, healthier products amongst the UK’s food makers, according to new research.

A recent survey carried out by business management consultancy Argon & Co and the Food and Drink Federation (FDF) found over two-thirds (69%) of respondents saying that a stable health policy from the government would help support their ability for further healthier product innovation projects.

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.

A prime example of this is the proposal to change the model underpinning advertising and promotion restrictions (ie. the Nutrient Profiling Model), just months after the latest set of regulations came in.

The research also revealed the scale and complexity of the investment required to make a product healthier – up to £5m per project at major manufacturers. Much of these totals 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 £500k due to packaging and artwork write-offs.

However, even with multi-million-pound investments, manufacturers are not guaranteed a return. Over two thirds (69%) said they 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 the product less commercially viable.

Due to these ‘unusually cost-heavy’ conditions, some food and drink manufacturers are diverting investment in healthier product innovation away from the UK to other markets. To prevent this from worsening, the FDF is urging the government to stop making frequent changes in regulation. It renewed its call to pause plans to change the Nutrient Profile Model and restore business confidence in healthier product innovation.

The government should also support industry with a collaborative public health campaign, to help nudge people towards healthier choices, ensuring that investment made in developing these options doesn’t go to waste, added the FDF.

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

Other results from the survey included that 63% of businesses complete at least six healthier product innovation projects every year, either through developing brand-new lines or reformulating existing recipes. More than four out of five (81%) respondents said they had reformulated products while exactly half (50%) had increase innovation in response to regulations as well as health trend-led consumer preferences, retailer expectations, and their own health commitments.

Products now offered by FDF members were found to contain 18% less salt, 19% less sugar, and 17% fewer calories than in 2021. Five manufacturers including Mr Kipling and Cadbury cake producer Premier Foods have committed to reporting on healthier food sales from next year, in order to evaluate regulation and guide future policy.