RPC Bites #33 – Battle of the gins, the future of soft plastics and serious food for thought for advertisers of HFSS products
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!!
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Following an application to the Court of Session in Edinburgh, William Grant & Sons (WGS), owner of the well-known gin brand, 'Hendrick's', recently obtained an order which temporarily prevents discount supermarket Lidl from selling its own brand 'Hampstead' gin in Scottish stores. Both the word 'Hendrick's' and certain design features of WGS' bottles are protected as registered UK trade marks.
WGS alleges both trade mark infringement and passing off and argues that Lidl's redesigned 'Hampstead' bottle, which went on sale in December 2020, closely resembles its own Hendrick's bottle. WGS argues that particular similarities include a diamond shaped label, specific elements of that label (including the word 'handcrafted' and images of scrolls) and a dark coloured apothecary-style bottle.
At a preliminary hearing, the Court found there was no evidence to infer consumer confusion in relation to the origin of the products, specifically noting that the average customer would not expect to find Hendrick’s on sale in Lidl stores and would “be familiar with Lidl’s own label brands, such as Hampstead”.
Whilst the Court acknowledged Lidl's submission that it did not currently sell any branded spirits in the UK, the judge appears to have been swayed by the fact that the retailer does stock other branded alcohol products, primarily beer. In an Opinion handed down on 25 May 2021, the Court ordered Lidl to temporarily refrain from selling 'Hampstead' gin in Scotland, until the next phase of the litigation. Lidl is defending the case and says there are “clear and obvious differences” between its product and WGS' trade mark.
In a move that many within the industry have been anticipating for some time, changes to the rules on advertising food and drink products deemed high in fat, salt or sugar (HFSS) featured in the Queen's speech, when parliament was reopened last month.
Whilst the specifics of the new rules are yet to be confirmed, it is likely that, from 2022, the online marketing of HFSS products will be banned and that HFSS ads will only be permitted on television after a 9pm watershed. Limitations on the physical location of HFSS goods within bricks and mortar stores are also expected.
According to retail thinktank IRi, the estimated scale of potential losses to advertisers is 5-fold:
- Loss of sales totalling £192M, if the ban is accepted outright;
- Loss of sales totalling £112M, if HFSS products are advertised after the watershed only (though demand for these slots is likely to considerably outstrip supply);
- Loss of sales totalling £96M, if advertising is moved to alterative channels (for example, radio and print media);
- Loss of sales totalling £80-£100M, if advertising is shifted to non-HFSS products sold by the same retailer / brand; and
- Loss of sales totalling £30-75M, if products are reformulated so that they are no longer deemed HFSS (many businesses within the soft drinks industry adopted this approach when the sugar tax was implemented in 2018 but recipe changes are expensive and not always popular with consumers).
The figures are eye-watering across the board and whilst option 5 is seemingly the least impactful, reconfiguring product recipes in a relatively short timeframe is no mean feat and will be particularly daunting for those whose entire businesses (or a substantial part of it) consist of HFSS products.
Whilst brands still have some time to test novel advertising strategies, the ban is moving ever closer and planning ahead in the months to come will be key in mitigating the financial impact.
On 19 May 2021, the ASA upheld a complaint concerning seven Instagram posts by influencer Jodie Marsh. The posts advertised three products called 'tonex', 'neptox', and 'hebex', along with images of Marsh and captions evoking the efficacy of the products for a person's health (including as a treatment for IBS). The ads were challenged on the basis that they were not compliant with the CAP Code's rules on health claims. The ads appeared in December 2020 and were therefore assessed under the Code rules that applied at that time (i.e. before the Brexit transition period expired).
In its decision, the ASA noted that for marketing communications published on or before 31 December 2020, all nutrition and health related claims made regarding foods must comply with EU regulations and that only health claims listed in the EU Register were permitted. NB: From 1 January 2021, only health claims authorised on the Great Britain nutrition and health claims register are permitted in UK marketing communications.
In breach of the CAP Code, none of the claims made in the ads were authorised in the EU register. In relation to the claims regarding the treatment of IBS, the ASA highlighted that these amounted to a further breach of the CAP Code, as they made disease treatment claims regarding food supplements, which are prohibited. The posts also failed to feature a label (such as “#ad”), which allowed consumers to identify them as marketing communications. In view of this and the various other CAP Code breaches, the ads must be removed and cannot appear again in their current form.
Both sustainability and wellness have been notable trends in the food and drink sector for some time, with consumers increasingly conscious about the correlation between the products that they buy and the impact that these have on their health and the wider world around them. In a move that combines the two, well-known food manufacturer Princes announced last month the launch of an on-the-go fruit pot, which will feature 100% recyclable packaging. In what Princes claims is the first product of its kind on the UK market, the fruit pots will be packaged in entirely recyclable aluminium containers, within cardboard sleeves.
Princes tuna range started to transition away from plastic in March 2020. Instead of being sheathed in the classic plastic wrap, the company introduced cardboard-wrapped tin stacks and hopes to roll these out across its 6-packs by March 2022.
The launch of the fruit pot range coincides with news that a £1M fund has been set up and backed by various industry giants, including Unilever, Nestlé and Mars, with the aim of improving the recycling of problematic 'soft plastics'. The category includes plastic bags, along with food wrappers, films, pouches, packets and sachets, all of which are currently difficult to recycle. Whilst the Government has plans to enforce the collection of soft plastics, the change is not due to take effect until 2026.
Dubbed the 'The Flexible Plastic Fund', the programme guarantees participants £100 for each tonne of recycled material as a minimum. The hope is that this will give soft plastics a stable value, thereby incentivising participation in the scheme. Waitrose and Sainsbury's have already pledged their support and will host in-store flexible plastic collection points.
At the end of last month, the UK Government extended a trade deal to its Australian counterpart, which proposes the phasing out of taxes on trade imports over a 15 year-period. Whilst the Government is keen to secure as many trade deals for the UK as possible, Australia is reportedly a particular priority of International Trade Secretary, Liz Truss.
But after the offer was formally made on 21 May, the National Farmers' Union (NFU) was quick to raise concerns over the impact of tariff free trading on British beef and lamb farmers. As reported in previous issues of RPC Bites (here and here), the sector has already been hard hit by the COVID-19 pandemic as a result of lower demand from the likewise impacted hospitality industry, amongst other things. The NFU's president, Minette Batters, considers that removing tariffs would have "a massive impact" on British farmers, who she fears would be unable to compete with the sheer scale of Australia's huge cattle and sheep stations. The export of premium cuts by UK farmers has been proposed as one solution but many within the industry remain sceptical.
Another major question is whether, as part of the deal, Australia would be permitted to export products that fail to comply with UK food standards. Similar to concerns raised over the export of chlorinated chicken and hormone injected beef from the US, it has been highlighted that Australia permits the use of pesticides and growth hormones that are banned in the UK. The details of the proposed deal are currently scant but animal welfare and food standards are likely to be a sticking point for many.
Trade in meat between the UK and Australia is relatively low at present, with only 0.15% of Australian beef exports coming to the UK. Many fear that removing tariffs will open the floodgates to cheaper Australian imports and that this will in turn lead to the large-scale closure of UK farms. Negotiations are ongoing and we will provide updates in subsequent issues of RPC Bites.