HFSS Regulations – How can brands and retailers adapt effectively to these changes?

Toby Lyons, August 2021

Since 2017, the government have slowly introduced regulations to control the growing childhood obesity crisis in the UK. This included banning advertising HFSS products directly to children. The government recently decided to make existing restrictions more stringent due to strong evidence linking increased Covid related deaths with obesity. These new HFSS regulations will be commencing from October 2022, therefore it is paramount that FMCG brands and retailers are aware of the challenges they face and are well placed to adapt to them successfully.

What are the main restrictions for HFSS brands?

1. Location Restrictions:

HFSS products will no longer be allowed on secondary spaces at store entrances, end of aisles and checkout areas. This also relates to the E-commerce site equivalent (Homepage, Cross Category, Checkout).

2. Multi-Buy Restrictions

Brands will no longer be able to activate multibuy promotions on HFSS products (Buy one get one free, 50% free). Other promotions like reduced price will however still be allowed.

3. Digital Restrictions

Brands will not be allowed to advertise on any paid-for media online (except in digital-only audio or any platform whose principal function is the buying or selling of products) such as search and social – unless they do not feature the actual product in the ad. They can however use owned channels to advertise their product.

4. Messaging Restrictions

Some retailers are beginning to clamp down on HFSS advertising that makes references to children. Also, any ads where a range of products are shown will also be restricted even if only one product is considered HFSS.

How can FMCG Brands and Retailers respond successfully to these changes?

With the loss of secondary space and TV before 9pm, it is more important now than ever that brands and retailers embrace commerce marketing that delivers high reach, strong sales, and a positive ROI, even after the regulations come into force.

HFSS brands

If you are a HFSS brand, there are still ways you alleviate the impacts of restrictions while complying to HFSS regulations. One method would be to increase spend in areas left unrestricted, for examples upweighting spend on touchpoints out of aisle to replace secondary space driving traffic to the actual aisle. This requires deploying a range of touchpoints such as Entrance Gates, Out of Aisle Barkers and In-Store Radio that can disrupt the customers at the point of purchase maximizing sales uplift.

Entrance Gates: Industry Benchmark Brand £ uplift = £35.2K*

Out of Aisle Barker: Industry Benchmark Asda Featured SKU % uplift = 16%*

In-Store Radio: Industry Benchmark Impulse Featured SKU ROI = £2.80*

HFSS Brands should ‘test and learn’ the array of media available to them under ‘restricted conditions’ so that when HFSS restrictions are imposed in April 2022 they’ve built up a bank of data and knowledge meaning they are confident booking the correct media that performs well for the brand. Reformulation recipes or launching healthier alternatives may seem a good method to bypass HFSS restrictions, however there are damaging drawbacks such as the risk of offending loyal customers and needing even larger shelf space. Instead, Brands should consider adapting their product messaging to help educate shoppers on the risks of overconsumption of HFSS products. This can create a healthier image for the brand ensure a strong public reputation that leads to product sales.

Finally, alongside a test and learn approach, there is also an appetite for brands to have one final ‘blow out’ before the HFSS regulations are introduced. This means increasing spend on marketing channels that you know drive a strong sales uplift and ROI but that you won’t be able to access once the rules come into place, such as secondary space and online digital channels.

This can leave brands in the strongest possible position before October 2022, however as mentioned earlier it is worth saving some of this budget for ‘test and learns’ under restriction conditions.

Non-HFSS Brands

The introduction of the HFSS regulations represents a great opportunity for brands that are compliant to expand their presence both in and out of category, growing market share. They will have less competition for secondary space in store, paid for digital ads, and grocery.com placements. They should take advantage of this by booking more cost-effective and highly targeted media which is inaccessible to non-HFSS compliant brands. The impact on product sales from selecting these newly available touchpoints can be measured effectively using Lobsters commerce marketing evaluation application called Plan-Apps.

FSDU/Shipper: Industry Benchmark Featured SKU % uplift = 51.6%*

FOS Display: Industry Benchmark Brand ROI = £4.33*

Gondola End: Industry Benchmark Brand £ uplift per store = £554*

Non-HFSS brands can also capitalize on restrictions by being able to showcase their full product range more easily, and with clever advertising can utilize this to create a strong brand halo effect that leads to a positive brand ROI. Their brand image will also not be damaged by having to adapt their product recipes to comply with HFSS restrictions.

Retailers

For retailers, their goal should be to encourage brands to activate their commerce marketing spend by making the booking process as easy as possible. They should be clear with them about what they can and cannot do when activating media. Creating specific media toolkits for compliant vs non-compliant products is an effective solution initially, but their longer-term ambition should be to adapt media channels to reduce the impact of restrictions. There is already an appetite from brands for new media opportunities to mitigate the loss of secondary space. However, retailers need to push the boundaries in ways that remain right for their shoppers – for example utilising more digital touchpoints that don’t increase online clutter but instead grab the shopper’s attention and allow more brands to feature.

*Source – Plan-Apps SMG/Lobster technology. Data pulled 20th August 21.