What are the potential implications of this?
There is already a precedent for retailers and suppliers having to implement different pricing and promotional strategies between Scotland and the wider UK market since Scotland’s early adoption of the minimum unit pricing for alcohol in May 2018. So, while it may add a degree of complexity for both manufacturers and retailers, there is existing proof that different planograms and promotional mechanics can be implemented with relative ease.
However, there may well be some border stores where consumers migrate to in order to avail of promotional discounts. We know from our tracking survey that promotions are a big driver when it comes to saving money. The temptation for this may be impacted on other cost-of-living factors, such as the cost of fuel vs the benefit of promotions.
How are these rules likely to impact on NPD?
With the UK Government only recently pausing the implementation of HFSS in England and Wales, the reality is that most suppliers have been taking the legislation into account when looking at NPD and product reformulation for some time.
We know from our research that 46% of consumers want manufacturers to focus on producing healthier products vs just 9% looking for more indulgent treats, so irrespective of the legislation the demand is there from a consumer perspective. In addition to this, suppliers and indeed retailers are very aware of the need to avoid further tightening of rules in this regard, leading to proactivity in terms of developing healthier products as well as considering alternative ways to promote products.
How will this sit with the current inflationary pressures?
Without doubt, the rising cost of food prices is being noticed by consumers and it is a huge concern for the vast majority. In the latest Levercliff survey, 70% of consumers overall and 73% in Scotland quoted rising food prices as their number one concern when it comes to food and drink shopping. The fact that 91% also stated that being on promotion is influential in their decision to buy a particular product, means that a reduction in promotional activity will have an impact on consumers propensity to buy particular brands, especially those with a higher price point. When you have categories that clearly rely on promotions to drive growth, there is significant potential to see year on year declines in sales volumes.
Any likelihood that the initiative will have an impact on health outcomes?
With obesity being a somewhat greater concern in Scotland specifically, versus the UK average, this perhaps explains and justifies the tougher line on regulations and promotions from the Scottish Government. A report earlier this year from the Scotland Food Coalition found in 2020 the average adult diet in Scotland was 40% above the recommended daily energy intake, with high levels of consumption of ultra-processed foods high in fat, salt, and sugar, and too low in fruit and vegetables, fibre, and other key nutrients.
However, if the Scottish government is expecting a curb on promotions to fundamentally alter shopping habits, this may be a false expectation which instead negatively impacts on households’ disposable income levels. Our recent survey found that the Scottish consumers were much more likely to claim ‘no need’ to act on their health and wellbeing versus the UK average, suggesting a challenging disconnect between the recognised need and expected desire to take action on health.