Heads Up #2: DRS and HFSS

Are you ready?

Many may think that 2021 will be the year of Brexit and Covid-19. But that would be misleading. This year, a hefty amount of legislation needs to be included in any commercial strategy to stand still.

The UK government is using legislation to solve social and environmental habits and improve everyone’s health. After years of encouraging businesses to adopt a voluntary commitment to solving social and environmental issues, the legislation will be tightened to drive faster progress in 2021 and beyond.

Legislation:

Two critical pieces of legislation will impact businesses in the UK from 2022:

1.    The extension of high fat, salt and sugar (HFSS) legislation will come into play to restrict the promotion of foods deemed to contribute disproportionately to obesity, especially amongst children

2.    The introduction of a deposit return scheme (DRS) to reduce waste caused by single-use packaging. To start legislation will focus on the beverage industry.

Heading your way:

Every two weeks, we look at trends, facts and legislation that may change consumer, shopper, supplier and retailer behaviours. Our first instalment covered revenue growth management.

In the second of our series, over the next 14 days, we will explore the impact of legislation on the FMCG industry.

Quick Stats

The introduction of these pieces of legislation could have a profound impact on earnings. Further restrictions on the promotion of HFSS products threaten about 20% of revenue across the range (source: UK government impact study).

The costs of compliance and administration of DRS threatens up to 33% of some business profits (source: Big River Solutions industry interviews).

So, what will this mean to manufacturers? And what can be done about it?

Findings

Over the last three months, we’ve been conducting interviews with many brands across the industry. Our conclusions are that brands can take three options:

·     Proactively address the new reality,

·     Watch what happens and respond effectively,

·     Do the minimum they need to.

This raises three critical questions:

·     What is the impact of compliance on profit, revenue and costs?

·     How do we mitigate the costs of compliance?

·     What opportunities do these disruptions present to category and brands?

What next?

Over the next 14 days, we will explore how legislation should be included in any value chain market initiative.

Call to Action

Finding growth in 2021 remains a priority for brands. If your plans don’t meet these legislative circumstances we would be delighted to help.

E: info@bigriversolutions.com