RPC Bites #25 - Dry January further boosts no/lo sales, PepsiCo and Beyond Meat join forces and Mondelez faces price fixing allegations

18 February 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.

The driest January since records began (we're talking booze, not rain)

As has become traditional in recent years, millions of Brits began 2021 by pledging to abstain from alcohol for the month of January. 2021 was no ordinary new year though and many questioned how a national lockdown and post-2020 fatigue would affect Dry January uptake and completion. 

Statistics from YouGov, commissioned by the Portman Group - the social responsibility and regulatory body for alcohol in the UK - make for an interesting read. The figures show that the winners of Dry January were not only those consumers who stuck it out until the bitter end, but also the no/lo alcohol category. This is supported by Tesco's recent announcement that demand for no/lo spirits and wines had “rocketed”, by 50% and 40% respectively. 

Whilst we regularly comment on the success enjoyed by the no/lo sector in RPC Bites, the statistics are compelling and demonstrate just how much the industry is booming. Between 2019 - 2020, the no/lo market has seen 30% growth year-on-year: a quarter of UK drinkers are reportedly now consuming no/lo products on a semi-regular basis and almost two thirds have reportedly tried a no/lo product. 

The trend has been on the radar of the drinks industry for some time now, with many of the key players having launched no/lo product ranges with great success. The results of the YouGov poll indicate that popularity is set to continue and quite possibly, that no/lo alternatives are set to become a permanent fixture on the food and drink scene. Read more...

Complaint against Silent Pool's CBD-infused gin upheld

Silent Pool's CBD-infused gin, 'Colorado High', has been found in breach of the Portman Group's Code of Practice for the Naming, Packaging and Promotion of Alcoholic Drinks. In the first complaint of its kind about a CBD product, the industry's Independent Complaints Panel ruled that the gin breached rule 3.2(c), which prohibits associations with illegal drugs and rule 3.2(j), which states that there should be no association with 'therapeutic qualities'.

Unlike cannabis, CBD is not an illegal drug in the UK. However, the Panel concluded that the use of the word 'high' on the product's packaging, together with the 'hallucinogenic' imagery of the Colorado mountains, and the refence to 'Colorado' (one of the first US states to decriminalise recreational cannabis), created an indirect association with illicit drugs. 

The Panel also considered that the product's name, 'CBD Gin' and descriptors such as, "a sensory infusion of wellness-enhancing CBD…" were problematic due to their suggestion of therapeutic qualities. Interestingly, the Panel found that the use of CBD in the product's name alone was enough to convey therapeutic qualities, since CBD is commonly marketed as providing health benefits. Seemingly, the key takeaway is that CBD should be "viewed as an ingredient, rather than a suggestion of therapeutic or health benefits". 

Silent Pool has now found itself on the receiving end of a Retailer Alert Bulletin from the Portman Group, preventing many retailers from reordering the product in its current form from April 2021. The Portman Group has also confirmed that it is in the process of creating guidance to assist producers seeking to use CBD in alcohol products.  Read more... 

Mondelez faces price fixing allegations

Chocolate giant Mondelez is being investigated by the European Commission over price fixing concerns. The EU market allows buyers to purchase products from countries where they are cheaper and then trade them in countries where the prices are higher, the intention being to drive prices down in more expensive countries. 

The EU Commission is considering whether Mondelez may have thwarted this process by potentially engaging in the following practices:

  1. Entering agreements to limit the EU Member States in which its products can be sold, including restrictions on passive sales;
  2. Entering agreements to raise prices or limit volumes of its products for customers trading them across the EU; 
  3. Entering agreements to prevent customers from engaging in parallel trade or acquiring products from parallel trade in exchange for compensation; 
  4. Damaging sales to certain EU Member States by restricting the languages used on its packaging independently or through trader agreements; and
  5. Curbing imports to certain markets by refusing to supply specific traders. 

If the allegations against Mondelez are found true, under EU competition law, the company could be fined up to 10% of its overall annual turnover which is due to be announced imminently, when its 2020 Annual Report is published. Read more...

Northern Dryland - Amazon suspends alcohol sales

E-commerce giant Amazon has stopped sales of wine, spirits and beer in Northern Ireland, citing concerns that excise duty will have to be paid twice on shipments of alcohol that are sent to Northern Ireland from the British mainland. The move comes despite reassurance from a Government spokesperson that: “goods will not be taxed twice, and we will issue new guidance clarifying the position to ensure any remaining issues are addressed.” 

The announcement came in late December, shortly after the trade deal between the UK and EU was published. In the wake of the new Brexit customs rules, the online retailer is reportedly preparing to de-list even more products, with speculation over pet foods and some over-the-counter medicines.

Amazon is not alone in voicing its fears. In January 2021, various major UK supermarkets also expressed concern regarding disruption to Northern Ireland food supplies and warned the Government that “urgent intervention” is needed. Read more...

Scotch sector unveils sustainability strategy

The Scottish Government has committed to a net-zero emission target by 2045 but the Scotch Whisky Association (SWA) has gone one step further; committing to reaching net-zero emissions across industry operations by 2040. 

The industry has already reduced its greenhouse gas emissions by a third over the past decade, and its revived strategy has a four-pronged focus, seeking to tackle climate change, using water responsibly, caring for the land and moving to a circular economy. As part of this, the SWA also intends that all of its product packaging will be reusable, recyclable, and compostable by 2025. 

SWA Chief Executive, Karen Betts, described the move as "a great example of collaboration within our industry and with other organisations in our supply chain, the energy sector and in government." 

The SWA's commitment comes hot on the heels of the Government's recent Green Distilleries Fund: a £10 million fund to help UK distilleries kick-start green innovations and reduce carbon emissions (the Government's press release can be read here). Amongst the distilleries set to receive the first round of funding are several Scottish Whisky distillers. Read more...

Absolut Vodka paving the way for sustainable alcohol bottles

Absolut Vodka has begun trialling a 57% paper and 43% recycled plastic based vodka bottle in the UK and Sweden. 2000 of the innovative bottles, which feature an outer layer of paper with a thin inner plastic layer, have been produced for trial purposes. 

If one sustainable innovation wasn't enough, the vodka brand has also just launched its limited-edition Absolut Movement bottle in the UK. The bottle is made of 60% recycled glass and features a swirl design to embody the spirit of stirring drinks together.  

As part of alcoholic beverage front runner Pernod Ricard's portfolio, Absolut is working towards achieving the group's pledge to ensure that all its packaging is 100% recyclable, compostable, reusable or bio-sourced by 2025. Read more...

PepsiCo-lab - soft drink giant joins forces with Beyond Meat

In a move that saw Beyond Meat's share price surge, the plant-based meat alternative producer has joined forces with PepsiCo to create 'The PlaneT Partnership' (the Partnership). The Partnership intends to combine Beyond Meat's plant-based prowess and PepsiCo's global marketing reach to create a range of plant-based snacks and beverages. 

Most famous for its eponymous fizzy drink, the Partnership sees PepsiCo expand its product portfolio in a nutritious and sustainable direction, having already acquired US baked fruit and veggie chip makers, Bare Snacks, in 2018. The Partnership seeks to cater for the ever-growing demand from health-conscious consumers in the US and Europe and build a more sustainable food system. 

The announcement comes at a crucial time for Beyond Meat. Despite the plant-based market gaining traction year on year and the buzz around the company's production of the "McPlant burger" (as reported in Issue 21 of RPC Bites), Beyond Meat reported a disappointing loss in the third quarter of 2020. Read more...

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