RPC Bites

RPC Bites #27 - Government 'anti-obesity deadlines' are near on impossible warn retailers and further red tape angst is on the cards for composite food products

18 March 2021. Published by Ciara Cullen, Partner and Ben Mark, Partner

Welcome to RPC Bites. Our aim in the next 2 minutes is to provide you with a flavour of some key legal, regulatory and commercial developments in the Food & Drink sector over the last fortnight… with the occasional bit of industry gossip thrown in for good measure. Enjoy!!

Access the full edition of RPC Bites here.

Further red tape angst on the cards for composite food products

Since the expiry of the Brexit transition period on 31 December 2020, the UK's 'third country' status has resulted in a swathe of new compliance requirements, particularly when importing and exporting foodstuffs to and from the EU. In what would be a further blow to the industry, reports indicate that additional paperwork may be required when exporting 'composite products' from 21 April 2021.

'Composite products' contain a mixture of processed products of animal origin (POAO) and plant products, for example pork pies and meat-based pizzas. Since 1 January 2021, Export Health Certificates (EHC) have been required for the export of composite products from the UK to the EU. However, certain products were exempt from this requirement including bread, cakes and biscuits containing less than 20% of processed dairy and egg products and confectionary and chocolate containing less than 50% of processed dairy and egg products.

It has recently been reported that new EU rules covering composite products will remove these exemptions from 21 April 2021, thrusting an array of composite products within EHC requirements. Currently, everyday products such as crisps, rice pudding and chocolate bars are exempt but may soon need to be signed off by a vet (at a cost of around £200 per certificate). Extracts from lengthy 'attestation' documents may also be required to verify the source of component ingredients.

As highlighted by Ian Wright, the chief executive of the Food and Drink Federation, the upshot of this will likely be a substantial increase in costs for exporters, which may make sending goods across the Channel commercially "unviable". Profit margins are likely to be squeezed and the pinch will be particularly acute when shipping composite products to Northern Ireland, where EU customs rules largely apply under the Northern Ireland Protocol. The UK Government has not yet addressed this apparent rule change, with its guidance on the export of composite products (which can be found here) still referring to exempt composite food products. We will provide updates on this topic in subsequent issues of RPC Bites
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Retailers: Government anti-obesity deadlines are near impossible

We're back with another update on products deemed high in fat, sugar and / or salt (HFSS). As noted in both Issue 21 and our new year bumper edition of RPC Bites (here and here), the Government's upcoming regulation of HFSS products is set to include a total ban on online advertising and restrictions on in-store location and volume price promotions.

Now, although supportive of the rationale behind the Government's anti-obesity drive, industry representatives are biting back at the timelines for compliance with the proposed legislation. As reported in the Grocer (here) and the FT, the British Retail Consortium (BRC) wrote to public health minister, Jo Churchill and small-business minister, Paul Scully to express industry concerns around meeting the deadline. The letter urges the Government to rethink this timeframe, estimating that adjusting UK-wide stores and adapting websites in order to comply with the proposed legislation will take at least 18 months, due to the impact of the ongoing COVID-19 pandemic.

The BRC pointed to the adjustment period previously imposed for the Soft Drinks Levy, arguing that a similar approach should be adopted here. The letter states: “We think that this hasty consultation process undermines the ability for Government and stakeholders to develop good regulation, for the sake of laying legislation next month". Keep checking subsequent issues of RPC Bites for an update on the Government's response to the industry's requests
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Oatly arrives on UK soil as demand for milk alternatives surge

Oatly, the Swedish "Original Oat Drink Company", has announced its plans to open what it claims will be one of the largest plant-based dairy factories in the world, in Peterborough, in early 2023. Oatly has recognised the heightened demand for plant-based products in the UK and seeks to service that demand by directly manufacturing and distributing its portfolio of oat-based dairy substitute products, including oat drinks (intended to be an alternative to milk), 'Oatgurt' and ice cream, from the Peterborough factory.

The new factory will inch Oatly one step closer to its goal of constructing future-proof factories, which by 2029, will be powered entirely by renewable sources. Oatly also anticipates sourcing all its ingredients locally, reducing the carbon footprint of its manufacturing process to demonstrate that plant-based products really are a more sustainable option. The factory is expected to be able to produce a staggering 300 million litres of oat drink per year when it initially launches, with the potential to ramp this up to 450 million.

Oatly's expansion rests upon the UK market's increasing appetite for plant-based diets continuing. In the last few years, UK customers have embraced dairy alternative products, with oat, almond, coconut, soy and hazelnut milks making strides in disrupting the traditional dairy market
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Much-needed wave of support for the fish and seafood sector

The Government has expanded its Seafood Response Fund following an outcry from besieged seafood exporters who have faced financial losses due to Brexit induced delays. The enhanced fund will provide increased support by widening access to cash grants for fishing and shellfish businesses.

In January 2021, the Government created a £23M fund for seafood exporters following complications with the export of both fish and shellfish to the EU post-Brexit. As of March 2021, the Government has expanded the eligibility criteria for the fund to those businesses that have been most effected by a reduction in demand from the hospitality sector.

The scheme will provide vessel owners with a history of fishing in the winter months with a single payment to cover fixed costs for a 3-month period between January to March 2021. This payment is expected to assist with insurance, equipment hiring and port fee costs.

The sector should also profit from a £100M Government fund established to modernise fishing fleets, the fish processing industry and to revive the UK's fishing industry. This fund will be supplemental to the £32M that has been allocated to replace the EU funding that the sector would ordinarily receive each year. Further details on the Seafood Response Fund can be found by clicking the read more link. Read more...

A fresh take on groceries - Amazon Fresh brings checkout-less supermarkets to UK

Amazon has brought its first checkout-less supermarket, 'Amazon Fresh', to the UK. In an attempt to develop its presence in the UK supermarket sector, the e-commerce giant's first venture into physical retail stores outside of the US involves customers simply walking out of the supermarket with their chosen groceries.

Amazon Fresh offers your typical supermarket fare; hot and cold food to go, fresh fruit and vegetables, chilled foods and daily essentials. Customers can expect Amazon own-label groceries alongside third party branded products. Takeaway coffee machines can be found at the front of the store whilst a parcel pick-up and returns desk for goods ordered from Amazon's website is situated at the back, creating a "one-stop shop" for UK customers.

A vast amount of technology ensures that customers aren't able to walk out without paying for their goods. Firstly, shoppers must have an Amazon account (although there is no need for a Prime subscription). Once in store, Amazon tracks customers as they shop and there are hundreds of cameras and depth sensors monitoring every item picked up and placed into baskets, all of which are associated with the customer's specific Amazon account.

The Ealing and Wembley Park stores are set to be the first of many and may shake up the traditional supermarket model. Whilst established supermarkets have already experimented with checkout-less options using in-store scanners, by streamlining the process even further, Amazon offers customers an easier way to shop. However, as is the case with most new technological advances, consumers will need to balance the extent to which they are willing to share their personal data in the interests of convenience and speed of service. Read more...