Childhood obesity: follow-up Contents

4Discounting and price promotions

50.Our earlier report considered the evidence presented by Public Health England and concluded that it justified action both on price promotions and on the promotion of food in the retail environment, such as on end-of-aisle displays:

40. Price promotions on foods in the UK have reached record levels—some 40% of the food UK consumers buy is now on promotion, double that of other European countries. Public Health England has presented clear evidence that price promotions lead to customers buying more of particular types of products, rather than simply switching brands, and that promotions are skewed in favour of higher sugar foods and drinks. While promotions may be presented as offering value for money for consumers, they actually lead to consumers spending more money, rather than less.

41. We endorse Public Health England’s recommendation that measures should be taken to reduce and rebalance the number and type of promotions in all retail outlets, including restaurants, cafes and takeaways. In our view this should not be limited to products which are high in sugar, but also those high in salt and fat. Voluntary controls are unlikely to work in this area and the Government should introduce mandatory controls. Measures should be designed to reduce the overall number of promotions of unhealthy foods and drinks. They should be as comprehensive as possible, and should be carefully designed to take account of possible unintended consequences, including the introduction of compensatory promotional activity of other unhealthy foods and drinks.

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44. Research suggests that the placement of foods in store may have a substantial impact on purchasing of unhealthy foods. We commend the progress which has been made in removing unhealthy food from checkouts in supermarkets, but new ways of promoting unhealthy foods in store are emerging, including high sugar foods being heavily marketed at the checkouts of clothing retailers and newsagents. We endorse Public Health England’s case for removing confectionery or other less healthy foods from the ends of aisles and checkouts. We recommend an outright ban on these practices and call on retailers to end the promotion of high calorie discounted products as impulse buys at the point of non-food sales.

51.The Government response to our, and Public Health England’s, recommendations in both of these areas was essentially to reject them:

The Government recognises that it is an established part of market practice for retailers, and sometimes producers, to encourage consumers to switch to their stores and products on the basis of the deals they offer. This practice is a welcome part of competitive markets, and can help deliver better deals for consumers. Many supermarkets offer promotional deals on fruit, vegetables and healthy products and these are welcome and to be encouraged.

That said, industry know their consumers want a healthier food and drink offer. While a lot of forward-thinking businesses are already making changes our action will accelerate this shift in the market.

Childhood Obesity: A Plan for Action focusses on other measures that will have a strong impact on childhood obesity.62

52.The evidence we heard at our most recent session from Prof Paul Dobson, a leading international authority on pricing strategy, retail competition, and supply-chain relations, reinforced the influence of price promotions on people’s purchasing, and therefore eating, choices.63 He told us, for example,

One of the issues is about quantity discounts. You have to ask yourself: why is it mostly unhealthy foods that get this? This is because of the nature of the dilemma in the consumer’s mind. They want a bargain and so they are tempted to go large, but the angel on their shoulder is also suggesting they restrain how much they purchase and then consume. They face a tension. It is because of that tension that you get incredibly different unit prices. To give just one example, if you went to a very well-known large retailer today and purchased a very familiar brand of carbonated drink, you would see a fourfold difference in the unit price between a small size and a large size or multi-buy. That kind of incentive, even for an unhealthy product, will drive bargain-hunters to purchase that; it is the extremity of that.

With healthier foods, you tend not to see such generous multi-buys for two reasons. One is that often the products are perishable. We all know about the problems of not consuming fresh fruits and vegetables quickly enough; they will perish and end up being thrown away. That limits them to some extent, but equally there is not that kind of tension in somebody’s mind about the difference between wanting the bargain and knowing that it could be harmful. You will always have that tension with unhealthy products.

A further aspect of unhealthy products is that they tend to have what we call expandable demand. That is why the products that have the largest proportion of sales driven by price promotions are often quite unhealthy ones. They are expandable, and consumers will grab the bargains while they are there. Therefore, price promotion lies at the heart of the problem in the retail environment.64

53.There is some evidence of an improvement in retailers’ practices relating to price promotions. The representatives of Public Health England told us that the proportion of food and drink sold on promotion had dropped from 40% to 37%,65 and the British Retail Consortium’s representative, Andrea Martinez-Inchausti, claimed that the most recent figures showed that at the end of 2016 it was just 27%.66 Ms Martinez-Inchausti added

Every single retailer in this country has an internal policy that makes it balance the quantity of products, both high fat, sugar and salt, if you want to describe them as such, or otherwise, that it advertises. Therefore, every retailer has made a commitment to promote healthier products. That was incredibly obvious over Christmas when there was a price war over vegetables to be used in the Christmas dinner. It was one of the first times when there was a real price war over carrots, for example, and that was certainly very well received by customers.

I think the perception for customers and their acceptability of what they would like to see is changing a little bit and with that the manner and type of products that are being promoted and how they are being promoted, but all our members are looking at different ways of positively promoting and providing information on healthier products to attract customers.67

54.However, Ms Martinez-Inchausti also told us—echoing the comments of her colleague from the BRC Andrew Opie in evidence to our original inquiry68—“for the purpose of achieving that level playing field and getting everybody to the same point, there needs to be intervention.”69 Prof Dobson agreed:

The aspect of a level playing field is important whenever you look at agreements with the industry. One of the problems with the responsibility deal[70] is that it was bilateral. As part of the deal, it was agreed with the manufacturer or individual retailer what would happen. The incentive to come forward with such an offer, say to reduce the amount of sugar in products or price them in a particular way, will come about only if it is in your individual interest to do that anyway because of that collective problem.

Therefore, anything that helps co-ordinate action [ … ] which leads to a benefit, whether it be a reformulation or change in the pricing structure, is to be welcomed.71

55.Duncan Selbie and Alison Tedstone of Public Health England acknowledged the continued importance of price promotions as an influence on consumers’ food choices.72 Whilst it was clear that they, as the representatives of the Government’s chief public health advisory body, were disappointed that the childhood obesity plan did not contain any measures to address the issue directly,73 nevertheless they offered some grounds for optimism. Those grounds are twofold. First, both Mr Selbie and Dr Tedstone acknowledged that industry itself, driven by customer feedback and competition from retailers such as Aldi and Lidl, is already going in the right direction, moving away from “multibuy” deals which encourage people to increase consumption, and towards competing on a single price.74 Second, we were told that data being collected as part of the efforts to monitor and encourage reformulation to reduce sugar content would also enable monitoring of price promotions, so that, as Dr Tedstone said, “if there is over-promotion of high-sugar products, we will pick it up through the monitoring programme we are setting up for the reformulation agenda.”75 The Minister reinforced the point, telling us that “there will be two opportunities for us to hold industry to account in a way we were not able to do before.”76

56.We are extremely disappointed that the Government has not regulated to provide the “level playing field” on discounting and price promotions which industry representatives themselves have told us is necessary for the greatest progress. We urge the Government to follow the evidence-based advice from their chief public health advisers and to regulate to further reduce the impact of deep discounting and price promotions on sales of unhealthy food. We welcome the action which some retailers have been taking, in response to customer demand, to rebalance their promotions away from unhealthy food and drink. We look forward to seeing the results of the monitoring of price promotions which Public Health England will be undertaking. Retailers who act responsibly on discounting and promotions should not be put at a competitive disadvantage to those who do not.

63 Q5, Q8, Q9, Q11, Q67

64 Q8

65 Q86, Q88

66 Q6, Q8

67 Q8

69 Q7

70 The Public Health Responsibility Deal “aims to tap into the potential for businesses and other influential organisations to make a significant contribution to improving public health”. Organisations signing up to the Responsibility Deal commit to taking action voluntarily to improve public health through their responsibilities as employers, through their commercial actions and through their community activities. For more information, see Department of Health, Public Health Responsibility Deal [accessed 21 March 2017].

71 Q10

72 Q86

73 Q87

74 Q87, Q88, Q89

75 Q88

76 Q90

23 March 2017