Increasingly, consumers are demanding products which minimise harm to, or have a positive effect on, the environment. As a result, there has been a proliferation of brands and products which claim to meet that demand. Thus, there have been an increasing number of regulations in the FMCG sector addressing health and environmental impacts , especially food & beverages in the last 2 or so years. And still more to come.

Two of the key ones are around the plastic straw ban, in place in several countries and pending in several more, and around HFSS (high in fat, sugar and salt).

HFSS regulations

Legislation around HFSS (to be implemented from October 2022) in the UK has been the topic of discussion for a few months now. Companies have been scrambling to reduce the fat, salt and sugar content in foods to avoid being subject to advertising and promotional restrictions.

Brands that fall under the HFSS category will face restrictions on how they can advertise their products and also what promotional mechanics they can use. For example, volume promotions like ‘Buy one get one free’, ‘Half price’ and ‘Buy 2 get one free’ will no longer be allowed for this category. Also, they will no longer be able to display them in shelves at end of aisle, check out or near the entrance. Europe has also mandated restrictions(but not as stringent as those in the UK) on HFSS products in its ‘Farm to fork’ strategy.

A report by Access to Nutrition Initiative shows that in the UK, 71% of sales at the largest food & beverage companies here are generated by brands that fall into the ‘unhealthy’ category. So it goes without saying that there is expected to be a significant impact on revenues of these companies. To the extent that The Kelloggs Company is taking the UK Government to court over the HFSS regulations.

According to IRI, a big data and analytics company in the sector, the changes place £1.1bn of sales at risk in the UK. This number raises the question of how much of the packaged/processed foods we buy fall into the HFSS category.

Expected loss of sales by category. Source: Barclays IRI research

There are several ‘healthy’ low fat products that also fall into this category. This is because, very often, with low fat brands, they are reformulated with hidden sugars to improve the flavour. Case in point is low fat or no fat natural yogurt. As they are not flavoured, you assume the yogurt has no sugar as it does not taste sweet. However, there are ‘hidden’ sugars to make it taste better without the added fat. How can hidden sugars make food taste better? Probably the subject of a separate blog.

Some companies like PepsiCo (Walkers snacks business unit in particular) have been proactive and launched HFSS compliant versions of their most popular flavours and SKUs.

Others like Mondelez (confectionery), have decided to stay the course. As all companies and brands in the confectionery sector face the same regulations, they expect that they may even benefit from the strong established brands they have in their portfolio. They feel they are less likely to lose share to new entrants due to the new regulations.

Plastic straw ban

Another piece of (impending) regulation that has a major impact on the FMCG sector is the one around plastic straws.

According to a BBC report in 2020, when England banned single-use plastic straws, stirrers and cotton buds, an estimated 4.7 billion plastic straws, 316 million plastic stirrers and 1.8 billion plastic-stemmed cotton buds were used in England every year.

Scotland has new laws around single use plastics, including straws coming into place in 2022.

Source: www.zerowastescotland.org.uk

Canada is aiming to ban single use plastics including straws by end of 2022 and China has also banned plastic straw use and sale in restaurants.

While there is no federal ban of single use plastic straws in the US, cities that have a plastic straw ban in place include Miami Beach in Florida, Seattle in Washington and Malibu in California. India is now implementing a strict nation-wide ban on single use plastic straws.

While a ban on single use plastic straw may feel daunting for several companies, what we need to remember is that paper straws preceded plastic ones. And natural rye grass straws preceded paper ones.

The earliest known use of straws is by the Sumerians in Mesopotamia. They used straws to drink beer that they brewed in large vats (too heavy to lift and pass around or pour into smaller containers). So they drank from long straws together.

In 1888, Marvin Stone filed a patent for drinking straws made of manila paper and in 1937, Joseph Friedman creates the worlds first bendable straw by inserting a screw in the straw and winding floss around the thread of the screw to create grooves. Upon removing the screw, the straw could now bend.

It was only in the 1960s that plastic straws replaced paper straws. But by 2020, an estimated 500million single use plastic straws were being used every day. In Europe, 25.3billion single use plastic straws were being used every year.

So what alternatives are available?

Paper straws – We used them once before and the technology exists. However these do have a large environmental footprint when compared to re-usable alternatives.

Bamboo straws – These are becoming increasingly popular and several start-ups are now making and selling bamboo straws. (Side note: If anyone is looking for bamboo straw suppliers, feel free to contact us and we can put you in touch with a few)

Metal straws – Metal straws are now more popular than bamboo ones, as consumers can clean and use them again.

Re-usable plastic straws – While these reduce the number of plastic straws thrown away, this is still plastic and we are just ‘kicking the can down the lane’.

While banning single use plastic straws are a great step toward reducing plastic pollution, FMCG companies should also view this as meeting consumer demand as on average, 8 in 10 consumers are looking to reduce plastic consumption.

For those interested, below is a video by the National Geographic on the history of plastic use globally.

What else do you think FMCG companies should do to reduce single use plastic? Do you think there should be more done to make packaged food & beverages healthier? Send us your thoughts by commenting on the blog or on our posts on social media.

Published by Veena Giridhar Gopal

After more than 20 years working in the FMCG/retail sector, Veena is now co-founder & CEO of salesBeat. salesBeat has an AI driven platform that uses micro and macro factors to model consumer buying behaviour and makes predictive recommendations of optimal stock levels to FMCG sales people who sell into supermarkets, distributors & wholesalers, ensuring 100% availability of your brands in store and increasing revenues by up to 30%.

Leave a comment

Your email address will not be published.