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«Labelling: Competitiveness, Consumer Information and Better Regulation for the EU Introduction Our customers and the public more widely have told us ...»

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European Commission Consultation

Labelling: Competitiveness, Consumer Information and Better

Regulation for the EU

Introduction

Our customers and the public more widely have told us that healthy living is

an increasingly important priority for them, and that they want more help to eat

healthily. We are responding strongly to this challenge, and welcome the work

that the Commission, Member State governments, consumer organisations,

nutritionists and others are also doing to help consumers lead healthy lives.

Labelling policy at European, Member State and individual company level has an important role to play as a facilitator in helping customers make choices that are right for them. Conversely getting labelling policy wrong risks stunting choice and innovation and imposing disproportionate costs on suppliers and retailers.

Our main contribution can be summarised as:

• Nutritional signposting: Over 3000 Tesco own-brand lines now carry our GDA based signposts, which set out clearly the amounts of calories, fat, saturated fat, sugar and salt that a portion provides plus the percentage of a typical adults guideline daily amounts. We are on track to roll this out to all 7,000 food lines by early 2007. We already have evidence this signposting is leading to change in customer buying decisions.

• Information and guidance: The introduction of our nutritional signposting scheme has been accompanied by a significant off-label customer information and education programme involving activities in-store and beyond. This has further strengthened the work we do via our Healthy Living Club, the Tesco Health website and a wide range of customer information leaflets.

• Product reformulation: Over the last year we improved our products by stripping out the unnecessary salt from over 500 of our most popular products, including a 30% reduction across canned soups, a 10% reduction in bread, and a 25% reduction for baked beans. As a result we have taken out over 500 million teaspoonfuls of salt from our customers diets. We have also cut fat levels in 125 products, saturated fats in 143 and sugar levels in 53. This year we will be reviewing a further 2000 products to see whether we can make their healthier, without reducing their palatability.

• Making healthy products more accessible: Our fresh fruit and vegetable lines received over 230 separate promotions last year, and our Value rage was extended to include over 30 fresh fruit and produce lines.

This has led to sales of fruit and vegetables growing faster than overall grocery sales.

• Exercise: We are in our fifth year as sponsor of Race for Life. This year, we hope to have 750,000 women running, jogging and walking the 5 kilometre course at events across the UK including 26,000 Tesco staff, and we are aiming for a fundraising target of £46 million. We hope to build on this in the run-up to the London Olympic Games, and have said that we are going to help get 2 million people running, cycling or walking in events that we will organise and sponsor

• Sharing research - In addition we will publish all of our customer research into the impact of our labelling on our website.

Labelling Legislation The fundaments of the current EU labelling regulatory regime date back to the 1970’s. Since then lifestyles have changed; customer interest in health and nutrition has increased; innovation has widened choice; and the internet and the media help customers make more informed buying decisions than ever before.

Although EU food labelling legislation has evolved, it has become more complex as it has done so, adding elements rather than reviewing the need for existing ones. With the pace of change it seems appropriate for the Commission to review the current regulation to [a] identify opportunities to simplify food labelling legislation and [b] to maximise the ability of economic operators to respond to customer demand. The result should be simple, transparent labelling that customers can trust and that can actually help customers make buying decisions.

To our knowledge over 40 pieces of European legislation currently regulate

food labelling:

EU Directive 2000/13/EC establishes the general requirements for the labelling of all packaged food sold in the EU including a list of compulsory information for food labels Vertical legislation applies to specific foods, such as cocoa, olive oil, jams and jellies Other directives cover labelling requirements in relation to additives, colourings, sweeteners and health claims The Unfair Commercial Practices Directive (UCPD) ensures that all information, both on labels and elsewhere, is provided in a manner that is not misleading.

The risk of complex labelling regulation Overly complex labelling requirements are difficult to comply with and difficult to enforce even for well-resourced companies. Knowing exactly what to put on to a label is a particular challenge for smaller and medium sized suppliers, who make up a significant part of the food supply chain.

Complexity imposes cost burdens and increases the risk of non-compliance – through lack of knowledge, confusion or error - and therefore leads to a loss of the desired protection for the consumer as a result.

A good example of the current complexity is provided by the labels attached at Annex 1.





At the same time, the complexity created by the current plethora of vertical and horizontal labelling Directives adds little in terms of consumer protection and goes against the mass of evidence to demonstrate customer desire for simple, food labelling that they can trust.

We would be happy to work with the Commission and other stakeholders to identify a full list of regulations for review with the aim of simplifying compliance requirements without watering down the current level of consumer protection.

Level of prescription Labelling legislation has an important and legitimate role to play establishing minimum standards and ensuring that consumers are not misled.

We believe that the existing legal framework, in the shape of the UCPD, provides sufficient protection, and that the regulatory authorities should vigorously pursue any non-compliance. At the same time, we acknowledge that European legislation has a role to play identifying priority issues of health concern for inclusion on labels.

However, overly prescriptive, complex labelling legislation also means that consumers are faced with a lot of detailed information, some of it they simply disregard and possibly other information present that they should be using. A good example is the way the current ingredients list is laid out making it difficult for customers to find key information, legislation has therefore been developed to add warnings and additional statements even though the information is present in the ingredients list.

Our research has shown that consumers are increasingly looking for "at a

glance" information which addresses two issues:

a] Is an individual product good for them?

b] Is the product safe?

We would urge the use of this as a framework with which to identify mandatory labelling priorities. Over-prescription runs the risk of capping innovation and competition to the benefit of the consumer. A good example is provided by the UK debate on nutritional labelling. Rather than taking a mandatory approach, powerful consumer demand has led to unprecedented levels of innovation, all of which has increased interest in the issue of health and labelling and is benefiting customers through the increasingly widespread provision of nutritional labelling.

The consumer angle We would argue that consumer wants and needs are put at the core of any labelling legislation. Too often enforcement and market protection issues are put ahead of simplicity and clarity. If consumer see labelling elements they don’t understand it is harder for them to make their way through to the elements they do. A good example is the health mark and “e” symbol, neither of which benefits the consumer. The volume of information put on labels and the role mandatory requirements have to play is also important. Time pressure, information overload, differing levels of interest and knowledge all need to factored into decisions on mandatory labelling requirements.

We believe that an average consumer test provides a potential vehicle for helping keeping labels simple and should therefore be put in place before any changes are made to the regulatory regime.

Our research shows a range of attitudes towards food consumption, health and intervention in the field of health, including labelling schemes designed to help consumers make healthier choices. Some customers are willing to take advice from a variety of sources. Others welcome help, but only if it is simple and support is provided. Yet others reject virtually all advice and almost take a please in rebelling against being old what to do.

We believe that the focus in the first instance should be on the mainstream i.e. the average consumer and on helping them through choice, information and simplicity to eat more healthily. At the same time more detailed work needs to be carried out to understand what can be done to influence the attitudes of those most resistant to change. However this should focus on providing information not education on the label.

Due consideration also needs to be given to the realistic amount of information that consumers can absorb in the time it takes to make buying decisions in a supermarket and the limited amount of space available. We believe that the Internet provides consumers with a powerful new tool which when combined with leaflets, guides and media work represent useful alternative sources for detailed information.

A clear trade-off exists between the space available and the amount of mandatory information to be given on-pack. It is therefore important that labelling legislation strikes a sensible balance between mandatory core labelling requirements and allowance for use of voluntary information.

Tesco research into the ability for elderly, price sensitive and ethnic minority customers to understand our nutritional signposting (see below) demonstrated that the biggest problem for those customer that were not able to use the labels to make healthier choices (6%) was not a failure to understand the system, but the size of the numbering.

Simplifying labelling regulation

Tesco would welcome the consolidation of existing pieces of legislation through both codification and simplification and we are keen to continue to engage with the Commission on the detail of this work. The aim should be to produce a simpler, more transparent and coherent legal basis which helps businesses innovate in an attempt to assist customers take the right buying decisions for them and to maintain current levels of consumer protection.

Given our concerns relating to over-complexity, we would not recommend an attempt to deal with both food and non-food labelling in a single piece of legislation.

In order to overcome the restrictions of space on a label, we would support an approach, which prioritises and provides on pack the information that supports customers to make the right buying decision for them at the point of purchase.

More detailed information can be provided in a more comprehensive manner off pack.

We have concerns about overly prescriptive labelling legislation. We firmly believe that a bottom-up market-driven approach offers an alternative with greater potential to help customers make the right decision for them. The experience of the nutritional labelling debate UK would seem to support this view - the combination of rising customer demand and a nudge from the regulator has resulted in competition and innovation to the benefit of consumers.

We also believe that in an increasingly international competitive environment Commission work to identify and communicate good practice to all stakeholders would be a valuable exercise. Providing on-line resource to enable all food businesses, particularly SME’s to identify what legislation applies to their products would improve compliance and provide an effective communication route for enforcement agencies. We believe that a one-sizefits-all approach would not necessarily produce the most favourable results.

There is significant variance across Member States in a) supply chain capability, b) enforcement capability, c) laboratory testing facilities and d) customers who are at different stages in terms of both interest and understanding of food labelling issues.

We also support concerns that have been raised about the risks of different Directorate-Generals within the Commission taking differing approaches. One way of addressing this challenge would be to bring labelling issues under the auspices of one Directorate-General, such as DG Sanco. Whilst ideally all legislation that impacts labelling should be incorporated into one document, we accept that this would be unworkable. However vertical legislation should have a timetable if review to ensure that any labelling elements are checked against the common principles set out in the framework legislation.

Nutrition Labelling Tesco has long been a supporter of attempts to use labelling and branding to help customers make healthier choices. We became the first retailer to introduce a healthy living brand and to put nutrition labelling on products back in 1985.We were also the first UK retailer to use front-of-pack nutritional labelling. We have introduced Glycemic Index labelling for diabetic and mainstream customers and launched Free From, Kids and Wholefoods ranges. We have recently reviewed our back of pack information to provide greater consistency and transparency; and we have been providing Guideline Daily Amount information on the back of pack for some time.

As customer interest in health and nutrition increased throughout the late 1990's, so too did our interest in what we could do to help make healthy choices simpler. Increasingly, customers told us that they found food labelling confusing; that they didn't have the time to study the back of packs in detail when shopping; and that they wanted an easy, honest way of labelling, so they can make an informed choice.



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