Food & Agri Update - Friday 21 April

Food Inflation, Shortages, Administration & Stock Hoarding

CPI inflation figures which shows headline inflation at 10.1% and food inflation at 19.1% Food prices, especially for fruit, vegetables and sugar, rose as poor harvests in Europe and North Africa reduced availability, and the weak pound made importing more expensive.

Helen Dickinson, Chief Executive of the British Retail Consortium, which represents the UK’s leading food and drink retailers, said:

“With food price inflation likely to slow in the coming months as we enter the UK growing season, we expect wider inflation will continue to ease. Nonetheless, prices for consumers will remain high.”

Certain products such as olive oil are predicted to continue to have price rises due to reduction in production; Spain, the world’s largest olive oil producer, has produced just half its normal quantity of oil.  The weather in Spain has remained adverse for next year’s crop with very little winter rain and an early summer.

Insolvencies in food and drink manufacturing have also increased in the past year as rising cost inflation and falling consumer spending squeezed firms across the industry.

Failures at manufacturers jumped more than 250% in the year ended 31 January 2023 as 143 businesses collapsed, compared with just 39 in the prior 12 months, according to research from financial services firm Mazars.

It is also reported UK food manufacturers are holding onto excess stock as fears over the supply chain crisis remain.  Reseach found that on average UK food suppliers were overstocked to the tune of nearly £80,000, according to analysis by inventory management tech firm Unleashed.  However, companies are still reluctant to sell too much stock as they fear a reprise of the supply chain crisis that affected global trade for over two years.  Companies trading long shelf-life goods like canned and dried products are poised to benefit more as they can order less stock over the next year while their current stock keeps rising in price in line with inflation. 

CPI inflation figures which shows headline inflation at 10.1% and food inflation at 19.1% Food prices, especially for fruit, vegetables and sugar, rose as poor harvests in Europe and North Africa reduced availability, and the weak pound made importing more expensive.

Helen Dickinson, Chief Executive of the British Retail Consortium, which represents the UK’s leading food and drink retailers, said:

“With food price inflation likely to slow in the coming months as we enter the UK growing season, we expect wider inflation will continue to ease. Nonetheless, prices for consumers will remain high.”

Certain products such as olive oil are predicted to continue to have price rises due to reduction in production; Spain, the world’s largest olive oil producer, has produced just half its normal quantity of oil.  The weather in Spain has remained adverse for next year’s crop with very little winter rain and an early summer.

Insolvencies in food and drink manufacturing have also increased in the past year as rising cost inflation and falling consumer spending squeezed firms across the industry.

Failures at manufacturers jumped more than 250% in the year ended 31 January 2023 as 143 businesses collapsed, compared with just 39 in the prior 12 months, according to research from financial services firm Mazars.

It is also reported UK food manufacturers are holding onto excess stock as fears over the supply chain crisis remain.  Reseach found that on average UK food suppliers were overstocked to the tune of nearly £80,000, according to analysis by inventory management tech firm Unleashed.  However, companies are still reluctant to sell too much stock as they fear a reprise of the supply chain crisis that affected global trade for over two years.  Companies trading long shelf-life goods like canned and dried products are poised to benefit more as they can order less stock over the next year while their current stock keeps rising in price in line with inflation.  Food manufacturers holding £80k in overstock over supply chain fears | News | The Grocer

Scotland DRS Delayed

Scotland’s new first minister Humza Yousaf this week ended weeks of speculation over the Deposit Return Scheme, revealing the planned launch date of 16 August had been put back until 1 March 2024, to give companies more time to prepare.

Scotland Alcohol Advertising Restrictions – ‘Back to Drawing Board’

Plans for a major clampdown on alcohol advertising have been scrapped by Scotland’s new first minister Humza Yousaf.

As part of moves to “reset” the SNP’s relationship with business announced this week, the SNP leader said he was taking into account warnings of the massive economic impact on companies already struggling with inflation and the cost of living crisis.

Scottish Retail Consortium director David Lonsdale added: “Scottish retailers take their duty to sell alcoholic products responsibly seriously. However, the recent consultation provided no tangible evidence that the proposed measures would be a proportionate public health measure.

“We welcome the first minister’s promise to take a fresh look at the issue of alcohol advertising and will look to engage positively on practical and evidence-based solutions to the issues.”

Meat Industry – Working Group in light of Crisis

The Food Standards Agency (FSA) and National Food Crime Unit met industry representatives to discuss next steps following reports of fraud within the pork industry raised by Farmers Weekly.

In a letter sent to attendees by FSA chief executive Emily Miles on Tuesday (18 April), she said: “We propose to convene a working group between FSA, Food Standards Scotland [FSS], food industry trade bodies and other groups with an interest [such as the Food Industry Intelligence Network] to explore how we can make it simpler and easier for individuals to report potential concerns about unsafe or fraudulent practices in the food industry. This group will explore whether to set up a single whistleblowing hotline, who might administer it and how information from it might be used.”  Farmers Weekly meat sector clean-up campaign gains traction - Farmers Weekly (fwi.co.uk)

IP Dispute – Lidl vs Tesco

A high court ruled this week that Tesco’s Clubcard Prices logo was copied from Lidl’s yellow circle branding. The court ruled that Tesco’s Clubcard logo was copied from Lidl’s logo and it infringed Lidl’s trademark rights and copyright.  Tesco has indicated it will appeal the ruling.

The court ruled Tesco was taking unfair advantage of Lidl’s discounter reputation with its design.

Mrs Justice Joanna Smith held the Clubcard logo a “subtle but insidious transfer of image” in the minds of some consumers re value although she found “no specific intention to free-ride on Lidl’s reputation”

It was held that evidence of a link being made by consumers between the two logos “establishes the existence of deception”.

Packaging – Extended Producer Responsibility (EPR) scheme

The UK Government published its response to the second Packaging Extended Producer Responsibility (EPR) scheme consultation earlier. EPR Consultation Government response template (publishing.service.gov.uk)

The regulations will apply to all UK organisations that import or supply packaging.

You need to collect and report packaging data if all the following apply:

  • you’re an individual business, subsidiary or group (but not a charity)
  • you have an annual turnover of £1 million or more (based on your most recent annual accounts)
  • you were responsible for more than 25 tonnes of packaging in 2022
  • you carry out any of the packaging activities

Packaging activities

You may need to act if you do any of the following:

  • supply packaged goods to the UK market under your own brand
  • place goods into packaging that’s unbranded when it’s supplied
  • import products in packaging
  • own an online marketplace
  • hire or loan out reusable packaging
  • supply empty packaging

KEY HIGHLIGHTS

Overall implementation timeline: packaging EPR scheme has been put back by a year from 2023 to 2024. This will involve partial EPR implementation from 1st April 2024 relating to local authorities payments; and full implementation of EPR in 2025 based on modulated fees.

Scope: Household packaging waste. Business/Commercial packaging waste collected from businesses and other organisations that pay for the collection of their waste, is out of scope but will be reviewed.

The current PRN system will continue until EPR is implemented in full.

Obligated businesses: single point of compliance confirmed for producers/importers. De minimis decisions: the threshold for producer recycling obligations and disposal cost payments at £2m turnover and 50 tonnes of packaging handled each year will stay as they are now. However, for reporting obligations, both thresholds will lower to £1m turnover and 25 tonnes of packaging handled each year respectively.

Litter payments: England and Northern Ireland will not introduce payments for ground litter but only for packaging in street bins. Scotland and Wales will be forming their own proposals for payments relating to ground litter.

Modulated fees based on recyclability will be introduced from 2025, rather than 2024.

Governance model: the scheme is likely to be run by a public body, based on HM Treasury and ONS early advice. The Government still wishes to see significant industry involvement.

The set up of a mandatory takeback scheme for the collection and recycling of fibre-based composite cups (disposable coffee cups) in 2024

Mandatory labelling of packaging recyclability with a single labelling format

All compostable and biodegradable packaging will have to bear a label saying ‘Do not recycle’ until evidence says it can be collected and composted separately

On DRS, glass has been removed from schemes in England and Northern Ireland, but remains included in Wales

Recyclable plastic film and flexible packaging is to be collected for recycling from both households and businesses across the UK by 31 March 2027.

Packaging recycling waste targets to 2030 confirmed.

BRC Concerns

BRC published concerns this week on these reforms to the packaging Extended Producer Responsibility (EPR) scheme, which is due to come into force in April next year, as ‘fundamentally flawed’.   BRC has stated that without significant investment in recycling infrastructure in Britain, households in the UK could be footing the bill for EPR without any meaningful improvements to UK recycling rates

ASA Rulings

Premium Health Europe BV t/a Prima

Upheld Internet (website content), App (paid ad) 19 April 2023 Premium Health Europe BV - ASA | CAP

An in-app ad and a website for a food supplement manufacturer promoted weight loss products in an irresponsible manner, made unauthorised health claims and claimed to prevent, treat, or cure human disease.

The CAP Code stated that health claims that referred to a rate or amount of weight loss were not acceptable when made in relation to a food. The first ad featured the claim “LOSE 4 STONE IN 15 DAYS”. Claims that consuming a food or food supplement could result in weight loss were health claims.

The ASA considered that consumers would understand the claim to mean that users of the advertised product could lose 4 stone in weight within a period of 15 days.  Because the ad included a health claim, made in relation to food, that referred to a rate and amount of weight loss, the ASA concluded that it breached the Code.

The ASA were further concerned that, by referring to a very large amount of weight being lost in a very short timeframe, the ad gave the impression that the dramatic change depicted by the before and after comparison was not only aspirational, but almost immediately achievable. For those reasons, the ASA considered that the ad implicitly encouraged approaches to, and methods of, weight loss that were likely to be harmful to physical health and mental wellbeing. The ASA considered that the text, which stated, “NO DIET OR EXERCISE REQUIRED” gave the impression that supplements alone could deliver rapid weight loss. This further contributed to the irresponsible message that healthier eating and exercise were unnecessary or inconvenient aspects of an individual’s weight loss journey. The ASA further considered that the claim “100% CLINICALLY TESTED”, as well the claim “100% NATURAL” which was unclear in meaning, irresponsibly suggested that methods of rapid weight reduction, performed without medical supervision, could be safe and normal.

Further ads featured specific health claims that were not authorised on the GB Register, and general health claims that were not accompanied by a specific authorised health claim, the ASA concluded that it breached the Code.  Additional ads referenced adverse health condition, or symptoms of them, the ASA considered these featured claims that a food could prevent, treat, or cure human disease, and concluded that it breached the Code.

THG Nutrition Limited t/a My Protein

Upheld Internet (website content) 19 April 2023

The website for a sports nutrition retailer omitted significant information relating to promotions and implied certain products were included in the promotion when this was not the case. On the website not all products on the website were included in the promotion. The ASA considered that the exclusion of some products was material information concerning the promotion, and the omission of that information was likely to mislead consumers. The ASA also noted the use of the text “Discount auto applies at basket” along with the promotional claim and considered that this text reinforced the impression that all products featured were included in the discount. THG Nutrition Limited - ASA | CAP

AND

The website for a sports nutrition retailer made misleading savings claims which suggested that a significant proportion of products would be discounted by 80%.

The ASA considered that consumers would understand the claim “UP TO 80% OFF EVERYTHING” to mean that they would be able to make a genuine saving against the usual selling price of products in the Black Friday sale. The ASA noted that the ad stated that the discount was "OFF EVERYTHING", and therefore consumers would expect that the sale included all products sold by the advertiser. The ASA considered that they would expect a significant proportion of products to be discounted by the full 80%, against the price at which they were usually sold by MyProtein.  From the data that had been provided, that the claimed savings appeared to be based on the RRP of the products. However, the ASA expected to see evidence of the pricing history of the products as sold by MyProtein. Because the ASA did not receive that, they were unable to determine the usual selling price of the products, or whether a significant proportion of them had been reduced by 80% against that price.

Given the above, the ASA concluded the savings claim had not been substantiated and was therefore misleading. THG Nutrition Limited - ASA | CAP

Government lifts bird housing restrictions

On 18 April 2023, the mandatory housing rules for birds and poultry in England and Wales were lifted by the UK Government.

Announced by the Department for Environment, Food & Rural Affairs (DEFRA) and the Animal and Plant Health Agency, poultry and captive bird owners will now be able to release their flocks.

David Webster to become Chief Executive at LEAF

Sustainable farming organisation Linking Environment & Farming (Leaf) has appointed David Webster as its new chief executive, starting in September 2023 from interim chief Philip Wynn, who has been overseeing Leaf following the death of founder Caroline Drummond in May last year.

David Webster will join the organisation from the UK grocery division of Associated British Foods, where he is currently director of sustainability and external affairs.

 

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