Confectionery

Impending legislation surrounding High Fat, Sugar & Salt (HFSS) products could cost the convenience channel £583m in sales.

IRI data found that the changing legislation of the promotion and placement of HFSS products, due to come into effect October 2022, could cost major multiples £1.1bn in sales, with the convenience channel suffering a £583m loss.

IRI’s analysis shows that the impulse categories of confectionery, crisps, snacks & nuts, biscuits and soft drinks are the most impacted categories due to having the most reliance on display promotions.

IRI impact analysis calculates that the display space restrictions will have a far larger sales impact than the volume promotion restrictions. However, as stores below 2,000 sq. ft receive exemption from display restrictions the impact of the HFSS policy on convenience stores will differ greatly depending on store size. IRI estimates that 35.7% of convenience stores are above 2,000 sq. ft. and not exempt from display space restrictions. Therefore impact in these stores is responsible for 94% (£550m) of total convenience sales risk from in-store HFSS restrictions.

The impact on the remaining 64.3% of convenience stores (36.1% of convenience £ turnover) that are below 2,000 sq. ft. is expected to be minimal due to being exempt from display space restrictions. IRI suggests that being the only store type not impacted by the display space restrictions may lead to future opportunities for stores of this size.

HFSS strategic consultant at IRI Joe Harriman explains that there is still an opportunity with the changes. “Despite these figures, retailers and manufacturers should be reassured that there are options to mitigate the risks of HFSS and create opportunities, especially in the larger convenience format. High selling HFSS products will be moving from display into the aisles and so the competition for in-aisle space will be tough for manufacturers. They firstly need to understand what impact HFSS restrictions will have on them right across convenience and then create an appropriate response. As a result of the HFSS restrictions retailers will need to make larger than usual range changes, and whilst this will mean that some manufacturers will find themselves needing to justify shelf space, others could be well placed to take advantage of the premium space opportunity that will become available to non-HFSS brands.”