The impact Tescos decision will have on manufacturers must not be under-estimated

The impact Tesco's decision will have on manufacturers must not be under-estimated

The unexpected announcement by Tesco on Wednesday (22 Aug) that it will incorporate colour-coding, or 'traffic lights', into its front-of-pack (FOP) nutritional labelling surprised industry watchers but has more importantly left UK food manufacturers isolated in their support for an FOP system based purely around percentage of guideline daily amounts (GDAs).

Until Wednesday, food manufacturers could say their stance - criticised by health NGOs and out of step with most supermarket chains - was at least in line with the country's most powerful retailer.

For food manufacturers, it is not a great time for that consensus to come to such an abrupt end. The UK government wants to see a single, consistent approach to FOP nutritional labelling across the industry, and the Department of Health (DH) has just completed a consultation that will help shape the eventual format the government will recommend.

Health Secretary Andrew Lansley's effusive welcoming of Wednesday's announcement suggests the government is now very likely to recommend a hybrid system incorporating traffic lights. Tesco is not only a highly influential player but such a powerful company can also be relied upon to know which way the wind is blowing.

So where does this leave food manufacturers?

The GDA page on the Food and Drink Federation (FDF) website reflects an apparently unequivocal position on the part of the manufacturers' organisation in favour of its GDA-only approach. However, when asked where it stood in light of Tesco's move, Barbara Gallani, FDF director of food safety and science, was distinctly more guarded.

Also, the FDF chose not to release its submission to the DH consultation, in contrast to a coalition of NGOs, including the British Heart Foundation and the Children's Food Campaign, which was only too happy to send a copy of its submission. 

Charlie Powell, campaigns director for the Children's Food Campaign, suggested the FDF had decided to keep its submission under wraps because it would reveal how out of step it now is with most retailers and quite possibly with the government's thinking. Morrisons is now the only supermarket chain supporting a GDA-only approach. 

However, Gallani said its submission did not include specific support for a GDA-only system. "There wasn't a specific question on that point so you wouldn't find that statement in our response. We really focused on the technical aspects." All this will be rendered moot in due course as all the submissions will eventually be published by the DH.

Of course, Tesco's announcement is far from being a retreat from GDAs. Tesco said its research showed that customers "continue to favour" GDAs over traffic light colour coding, which it said does not provide the detail customers need to make informed decisions. But it said its research also showed that customers prefer a combination of traffic light colours and GDAs, and want "a consistent approach to labelling across the industry".

Gallani said the FDF "will be very interested" to look at Tesco's research, though that leaves one asking why Tesco has not shared these insights with the FDF already. Interestingly, Gallani also said the FDF was not given any advance notice of Tesco's announcement, only that it knew that as part of its consultation the government had asked all stakeholders to "look beyond familiar positions".

So, has the FDF also looked beyond its familiar position? Clearly, the evidence suggests not to the same degree as Tesco, yet.

Gallani preferred to characterise Tesco's move as "adding something" to the GDA-based approach. If eventually the FDF has to accept traffic lights as a reality, Gallani's remarks suggest it would also seek to characterise this as a refinement to the GDA system it has in place. 

But one shouldn't underestimate what this likely concession represents to food manufacturers. Traffic lights are not just about adding a splash of colour to the label. Manufacturers have held out against colours because they make the FOP label less like an additional piece of information for consumers and, in the case of some products at least, far more like a warning. It is this 'interpretive' element in labelling that the producers do not like. The same divergence of view between food producers and campaigners can also be seen in the US and Australia. 

Nevertheless, traffic lights appear to be on their way in the UK, though it should be noted that under the EU Food Information Regulation (FIR) passed last year the government can only recommend rather than mandate a format for FOP labelling. And, reading between the lines, the FDF may well be preparing itself for a similar readjustment to Tesco's. Certainly, Gallani did not give the type of robust justification for a GDA-only approach that we might have heard a year or so ago.

The interesting question is whether the FDF will wait for the Government's official recommendation or like Tesco move in advance. Powell expects some FDF members will begin to change tack even before the government officially makes up its mind. Some manufacturers, such as McCain Foods, already use traffic lights. 

Gallani would not comment on whether some FDF members might now independently switch to a hybrid approach but it seems likely some may, like Tesco, see it as better to be ahead of the curve. When the Government eventually makes its official position clear, Tesco will already be there, in harmony with official thinking rather than placed in the position of having to reform. In so doing, Tesco has given itself a good PR story to tell during a difficult period for the company.

The move also chimes with the heightened attention being paid to encouraging healthier lifestyles in the wake of the successful and uplifting London 2012 Olympic Games. 

Promoting more physical activity is always an aspect of the diet and health debate the food industry is keen to stress as it moves the onus away from certain foods being cast as intrinsically unhealthy. The fact exercise has been the primary focus since the Olympics will have been welcomed by food companies. But, perhaps with the post-Olympics wave still reverberating, this was an equally good moment to announce a labelling reform aimed at helping consumers enjoy healthier diets. Tesco therefore appears to be in tune with the zeitgeist in more ways than one. The question is how quickly will food manufacturers also tune in.