RPC Bites #24 - Brexit hits Percy Pigs, HFSS restrictions to become law in 2022 and a reminder that despite popular belief, honey is not medicinal

27 January 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.

Honey, I breached the CAP Code

A press advertorial for Manuka Doctor claiming that its honey product could treat coughs has been found to breach the CAP Code. The ad contained text which, the ASA felt, played to the public's current health consciousness, stating that "advice published by NHS watchdog NICE and Public Health England in 2018, confirms what many of us have known for years; honey should be the first line of treatment for patients with a cough…". The ad also emphasised the anti-microbial properties in Manuka honey. 

The ad was challenged on the basis that it stated or implied that Manuka honey prevented, treated or cured human disease. Manuka Doctor denied any wrongdoing, claiming that the ad merely echoed Government advice. Furthermore, Manuka Doctor argued that a cough alone was not a disease, merely "a voluntary or involuntary act of expulsion of air from the lungs that cleared the throat and breathing passage of foreign particles"

After seeking detailed opinions from the food industry, the ASA disagreed. On 6 January 2021, it ruled that the ad breached rule 15.6.2 of the CAP Code and reminded Manuka Doctor that advertisers are prohibited from stating or implying that a food can prevent, treat or cure human disease "in any circumstance". As a result, Manuka Doctor was ordered to remove all such claims from its advertising. Read more...

HFSS Update 1 - Promotions

As regular readers will know, the ever-changing regulatory landscape for products deemed high in fat, sugar and/or salt (HFSS) is often featured in RPC Bites. This time, we write to provide not one, but two updates: The first concerning promotions and the second concerning No/Lo alcohol products.  

On 28 December 2020, citing growing concerns over promotional offers and emphasising that the COVID-19 pandemic has highlighted the impact that obesity can have on people's health, the Government announced the following HFSS restrictions, which will apply from April 2022:

  • Location restrictions at store entrances, aisle ends and checkouts, plus online equivalents such as homepages, landing pages for other food categories and basket and payment pages;
  • Volume price restrictions prohibiting 'buy one get one free', '3 for 2' or similar volume price promotions; and
  • A ban on free refills of sugary soft drinks in the eating-out sector.

It is important to understand that the restrictions extend beyond obvious HFSS produce; pre-packed food and drink products across several categories including breakfast cereals, yogurts and fruit juices will also be covered.

Interestingly, the restrictions will only apply to stores with a square footage of over 2,000, so smaller local and convenience type stores will not be caught. In drawing this distinction, the Government considered that larger stores would be more likely to have distinct checkout and front of store areas, as well as multiple aisles and aisle ends. Specialist HFSS retailers selling one type of HFSS food product (for example, chocolate shops), and stores with fewer than 50 employees will also be exempt. 

The Government has launched a further consultation on the enforcement of the restrictions (available here). This is set to close on 22 February 2021. Read more...

HFSS Update 2 - No/Lo alcohol products

The new restrictions on the promotion of HFSS products (as reported above) appear to contain an exemption for certain No/Lo alcohol products. Great news then, for the thriving No/Lo alcohol sector, except that the position is not as clear cut as it first seems. 

Whilst a consultation is currently ongoing, the current proposal is that drinks within the scope of the Soft Drinks Industry Levy (SDIL) will be caught by the new HFSS promotion restrictions. Where No/Lo alcohol products are concerned, drinks with 1.2% alcohol by volume (ABV) or less fall within the SDIL, subject to certain other conditions.

However, according to the consultation, the SDIL does not apply to "an alcohol replacement, like de-alcoholised beer or wine." This might initially seem straightforward but on closer examination, a crucial question arises: Are products with 1.2% ABV or less genuinely regarded as "alcohol replacements"?

The issue is further exacerbated by the consultation's reference to "de-alcoholised beer or wine". According to the Government's Low Alcohol Descriptors Guidance (available here), "de-alcoholised" refers to drinks from which the alcohol has been extracted, so that the end-product contains no more than 0.5% ABV. By contrast, the SDIL Regulations 2018 classify "alcohol substitute drinks" as soft drinks "made from an alcoholic beverage by a process of de-alcoholisation by which the alcoholic strength of the beverage is reduced to 1.2% or lower". There is an obvious disparity between the language in the SDIL Regulations and the consultation on the new restrictions. 

Further clarity is needed on the scope of the apparent No/Lo alcohol exemption. For now, the guidance seems to suggest that a drink with an ABV that has been reduced to 0.5% or less and is a direct alcohol replacement will be exempt, but that drinks with an ABV of up to 1.2% which are not direct alcohol replacements (for example, Kombucha tea) will be subject to the new restrictions.  

Further information regarding the labelling of No/Lo alcohol products and their interaction with the SDIL can be found in The Wine and Spirit Trade Association's recent "Guide on labelling low and no alcohol products designed as 'spirit drink' substitutes". A copy can be accessed here. Read more...

Brexit hits Percy Pigs

Since the Brexit transition period expired on 31 December 2020, food and drink businesses have run into difficulties at the Northern Irish border. Under the Northern Ireland Protocol, all food and drink entering Northern Ireland from Great Britain must comply with the relevant customs rules. 

This is not the only Brexit related red-tape issue businesses are facing when importing goods into Northern Ireland and the EU. Products of several large UK retailers are now subject to the complex 'rules of origin' regulations, which were agreed as part of the UK's trade deal with the EU. These regulations impose tariffs on products that are initially produced in the EU, imported into the UK and then re-exported by a UK business back into the EU. One such affected product is the M&S fan-favourite, Percy Pigs. 

Manufactured in Germany, Percy Pigs have previously been sent to the UK and then re-distributed across M&S stores in Northern Ireland. However, under the new regulations, M&S will incur certain taxes when re-exporting the popular sweets. 

This highlights that businesses with production and/or manufacturing centres in the EU Bloc will need to think about their supply routes in order to ensure continuity of supply, whilst not falling foul of the new regulations. Such businesses should carefully examine their logistic pathways to EU-based stores. Read more...

Morrisons to become the first UK supermarket with a £10 minimum wage

Morrisons has recently announced that it will pay all its staff a guaranteed minimum wage of £10 per hour. For most of its workforce, this represents an increase of 9% from the supermarket's 2020 minimum hourly wage of £9.20 and an increase of over 46% since 2014. 

Approximately 96,000 members of staff stand to gain from the pay increase. The £10 minimum wage is a 50 pence increase over the voluntary Living Wage Foundation rate. Most of the costs of the pay increase will be met by direct payroll investment and the remainder by changes to the discretionary bonus scheme. Morrisons is leading the way in increasing wages for its staff and this could be used as a marketing technique for the supermarket.  

The pay rise is subject to a vote by union members today. If passed, it remains to be seen whether competitor supermarkets will follow suit. Hot on Morrisons' heels, on 19 January 2021, Aldi announced that minimum hourly pay will increase to £9.55, for regional workers and to £11.07, for those in London. Asda, on the other hand, has stated that it does not intend to amend its hourly rates. Read more...

Food labelling - country of origin updates

New post-Brexit Government regulations require UK businesses providing food products for immediate consumption, including restaurants, pubs and public food vendors, to label any meat, fish or seafood products with its country or place of origin. The rules are also applicable if these products are being sold to a mass caterer. 

Fortunately, businesses will have until 1 October 2022 to make the required changes. The Government hopes that this long lead period will give businesses sufficient time to adapt to the changes, review their supply chains and take the necessary steps, to ensure compliance. 

Whilst at first glance it seems that these changes will largely affect distributors, they are also likely to impact the wider supply chain. For example, the seller of a food product in a restaurant will expect its suppliers to provide certainty of origin and this expectation will flow up the supply chain. Businesses should start examining their supply chains now, to identify whether such certainty can be given and to address any logistical challenges posed by the new rules. Read more...

Defra consultation on crop gene editing plans

Genetic modification has long attracted negative press. However, we could be moving one step closer to the use of genetic technologies in food production, with the Department for Environment, Food & Rural Affairs (Defra) recently announcing that it will be undertaking a three-month consultation into the regulation of gene editing. 

As is often the case when implementing innovative practices, this move has had mixed reactions. Several scientists have already provided a positive response to the consultation, identifying the potential benefits to cost and nutrition, as well as a reduction in the use of agrichemicals. Similarly, the National Farmers Union (NFU) has welcomed the launch, stating that genetic technologies could unlock substantial benefits for the UK farming sector and are "critical" to achieving the NFU's climate change net zero ambition. However, to the contrary, environmental groups have "expressed disbelief at the announcement", warning that the move could provide a backdoor for the introduction of genetically modified processes into the UK. 

Defra has explained that gene editing differs from genetic modification as it only adds DNA from the same species using natural methods, whereas genetic modification involves mixing genes from other plants. It highlights that both methods could help plants develop a resistance to pests and diseases and advance extra nutritional benefits that would otherwise take many years to achieve.

Responses to the consultation can be provided via an online survey (available here) and must be received by 17 March 2021. Read more...

Confiscation of ham sandwiches, a sign of a wider issue?

Stories of British lorry drivers having their ham sandwiches confiscated by Dutch customs officials have recently grabbed headlines. Now that the UK has officially cut ties with the EU, EU import regulations prevent certain foods from entering the union, even if they are personal items, such as those contained in a humble packed lunch. 

UK Government guidance has warned commercial drivers that in addition to requiring a negative COVID test before crossing EU borders, drivers cannot bring products of animal origin (POAO) into the EU, including meat and dairy produce. 

This is a stark and perhaps slightly absurd example of how life has changed for the UK, now that it is outside the customs union. The confiscation of ham sandwiches certainly goes to the wider issue of how both the UK and EU must understand what new restrictions on food imports and exports mean, in practice. 

Importers and exporters of POAO face a new world in which they must adhere to new requirements and find ways to innovate in order to ensure that their products can reach the desired market. The UK Government's latest guidance on transporting goods between Great Britain and the EU can be viewed here. Read more...

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