RPC Bites 36 - HFSS restrictions delayed, Oatly faces 'greenwashing' claims and Heineken settles its dispute with the Mexican Tequila Regulatory Council
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!!
Mixed messages on HFSS - some relief but the advent of restrictions on in-store promotions is postponed
For some time now, RPC Bites has been closely following the Government's campaign to curtail the promotion of food and drink products deemed high in fat, sugar and salt (HFSS). The forthcoming changes will enter law through the Health and Social Care Bill (the Bill), which is currently making its way through Parliament.
With a swathe of restrictions on the horizon, certain brands have been hard at work, reformulating their ranges so that products fall outside the legal definition of HFSS. However, some are now concerned that this may not, in fact, provide the solution (albeit a labour intensive one) that it initially appeared to offer.
The Bill currently allows advertising to continue where there is no "identifiable" HFSS product but there is uncertainty over what exactly this means. Current ASA guidance states that an ad will likely be deemed to concern an HFSS product if it "refers to or features a brand name that is synonymous with a specific HFSS product". It is unclear if the guidance will be updated once the Bill becomes law. If not, this may mean that despite efforts to recalibrate product lines, retailers find themselves the victims of their own success if their brands have become "synonymous" with products deemed HFSS.
While HFSS businesses consider the impact of this, retailers will be relieved to learn that the Government has announced the postponement of certain HFSS restrictions that were due to take effect from April 2022. The measures concern the in-store promotion of HFSS products and will now come into force 6 months later than originally planned.
From October 2022, retailers with over 50 employees will be prohibited from:
- promoting HFSS products at aisle ends, store entrances, checkouts and their online equivalents; and
- using volume price promotions such as 'buy one get one free' and '3 for 2' in relation to HFSS products.
Accusations of 'greenwashing' see Oatly's share price drop
US short seller, Spruce Point Capital Management (SPCM), has accused Oatly of misleading customers about the plant-based giant's sustainable practices. SPCM also alleges that Oatly misled investors and inflated its revenue. All allegations are strongly denied by Oatly.
In a 124-page report, SPCM accuses Oatly of "cherry-pick[ing]" study results by failing to show that its impact on water consumption is (allegedly) worse than dairy milk. It also cited "excessive trash dumping" and transportation costs due to "production facilities thousands of miles away from oat sources".
Following the report's release, Oatly's share price reportedly fell by 7%. The Swedish business was quick to reject the claims, stating that SPCM's "false reports" were made to thwart Oatly's stock price for its own financial benefit. The drop, however, demonstrates just how powerful sustainability concerns have become.
'Greenwashing' is a particularly hot topic at the moment. After launching an investigation into environmental claims in November 2020, the Competition and Markets Authority (CMA) published draft guidance in May 2021. Amongst other things, the document stipulates that the full life cycle of a product must be considered when evaluating whether environmental claims can legitimately be made. For further information on the CMA's draft guidance, see our recent Retail Therapy blog here.
Heine-can: Danish brewer will be able to use 'Tequila' for Desperados beer
After instigating several EU legal actions, the Mexican Tequila Regulatory Counsel (CRT) recently announced that it has reached an "amicable" agreement with Heineken, over the use of the word 'Tequila' in the brewer's Desperados beer. The terms of the agreement are confidential.
In the EU, 'Tequila' is protected as a geographical indication (GI), meaning that only products originating from and produced in Mexico can use the term. It is one of only three spirits from third countries (i.e. non-EU member states) that are afforded protection in this way.
By using the term 'Tequila' in connection with Desperados beer, the CRT alleged that Heineken had violated the GI. Heineken brews Desperados by adding 0.14% of ‘Tequila flavouring’ but as the flavouring is composed of 75% Tequila, as well as other ingredients, the CRT claimed this was misleading to consumers.
Before settlement terms were agreed, the dispute had run for some time, with proceedings issued in France and the Netherlands in 2017. The CRT had also commenced proceedings against Heineken's Mexican Tequila supplier but following settlement of the disputes in the EU, it is reported that those proceedings have likewise been resolved. Read more
Going Carbon Neutral – a Lidl less waste!
Several supermarkets have recently announced a slew of targets for reaching net zero emissions (by 2035, in the case of Tesco and M&S and by 2040, in the case of Asda and Iceland). Aldi UK & Ireland claims that is has been carbon neutral since 2019, offsetting emissions with global projects. Lidl is the latest supermarket to announce its zero-emissions intentions, reportedly aiming for carbon neutrality by 2022 and an 80% reduction in global emissions by 2030.
Lidl has various innovative strategies, which are intended to cut its carbon emissions. These range from plans to produce carbon neutral cheddar (a first in the UK), equipping new branches with solar panels and investing in progressive lighting and refrigeration technology. Lidl will also focus on sustainability throughout its supply chain, by obliging those that it contracts with to create and achieve their own sustainability targets and supporting farmers to measure and reduce their carbon footprints. Read more
On the menu this week: 3D printed meat and lab-grown foie gras
In Issue 15 of RPC Bites, we reported that KFC was developing the first ever lab-made 'chicken' nugget, in partnership with Moscow-based company, 3D Printing Solutions. Along similar lines, Redefine Meat, an Israeli food technology company, last month confirmed that its range of 3D printed meat alternative products (which are suitable for vegans) will be launched in the UK before the end of 2021.
Redefine's methods involve using ingredients such as soya to mimic the composition of traditional meat. Products are then manufactured using 3D printers. A spokesperson for Redefine claimed that the company's products have “unparalleled taste and texture” and with plans to produce 3D printed 'whole cuts', Redefine certainly has high ambitions.
For some time now, cultivated meats have been heralded as a more ethical alternative to their traditional counterparts, from both an environmental and animal welfare standpoint. Whilst there was initial scepticism over whether consumers would be receptive to the idea, an increasing number of businesses are now operating in the space. One such operator is Paris-based cultivated meat start-up, Gourmey, which recently announced that it is cultivating lab-grown foie gras, using duck stem cells. During the process, stem cells are harvested from a single fertilised egg and are subsequently grown in bioreactors and transformed into tissue. Read more