Few will be shielded from HFSS restrictions; the impact will be felt across the entire store.

By Joe Harriman, Strategic HFSS Consultant, IRI


‘All change’. That is the loud and clear message coming from the Government to Manufacturers and Retailers when it comes to new high fat, sugar and salt (HFSS) regulation. The UK Government will introduce new rules for the display, promotion and advertising of HFSS products in 2022.

The recommendations presented by the HFSS guidelines are set to be the biggest change to the sector in decades. Their impact will be felt by all Retailers and Manufacturers, even those who may think they’re shielded by not producing HFSS goods.

Following our research and data modelling, IRI estimates that of the top 15 impacted categories, 64% of SKUs will fall within HFSS restrictions, leading to an estimated £1.1 billion of sales at risk per year across supermarkets. This increases to £1.7 when the sales risk to convenience is included.

But will these changes be a cause for concern or an opportunity for Manufacturers and Retailers? To know that, the focus should firstly be on understanding the impact, then scenario planning and collaboration between supplier and Retailer.
To help guide you through what is likely to be a ‘Retail Space Race’, we’ve outlined the different next steps for Manufacturers and Retailers, who will need to act promptly to mitigate risk and turn the situation to their advantage. Find out how you can make improvements or react quickly on the conveyor belt of change.

How will manufacturers be affected by HFSS regulations?

When it comes to the new HFSS regulations, almost the entire store will feel the impact but the degree of change will depend on both the product range, and the proportion of range dedicated to HFSS products. I therefore see manufacturers falling into three main groups.

HFSS products

This is the most obviously affected group in the trio. For some Manufacturers whose offering is predominantly made up of HFSS products, there may be the option of reformulation, but we know this is far from simple and will be easier for some categories than others. Where reformulation is not an option, it is important to understand what levers can be pulled in order to deliver incremental ROI from the shelf.  Without the off-shelf boost, what can Manufacturers do to drive sales from within the aisle? The optimum assortment with the most effective pricing and promotional strategy will be key.

A combination of HFSS and non-HFSS products

Manufacturers with a mixed composition of goods will need to mitigate risk to their HFSS brands with new promotional and space strategies whilst using their non-HFSS products to compete for the lucrative vacated display space. This will primarily come down to whether these products are scalable and can drive incremental sales for Retailers looking to fill the HFSS void on their displays. They will need to demonstrate to Retailers that they are capable of delivering the volume and value from the display.

Non-HFSS offerings

This group covers non HFSS brands in HFSS categories and also brands in categories not covered by HFSS. Manufacturers in this group need to plan to make best use of their soon-to-be advantage in the market, by proving their scalability and positioning their offering to be as ready as possible for the rule change and the positive exposure of the ‘space race’.

How will Retailers be affected by the HFSS rulings?

26% of display space is estimated to become vacant due to the HFSS restrictions and in some categories, the change is more dramatic. This will lead to a huge amount of in store space change both for HFSS categories and non HFSS categories, yet many businesses, including Retailers, simply aren’t prepared for the rule changes. According to the IRI HFSS survey, 84% of respondents have no firm idea of the potential sales impact on their business and most of those surveyed lack confidence in their understanding of both the media and in-store restrictions.

Retailers who get these space changes right will be those who come out best from these restrictions. With unprecedented changes like this, it is important for Retailers to run trials to tweak plans and ensure an optimum strategy is ready to be put in place when the restrictions are finally implemented.

Whilst the delay to the implementation of the restrictions might have offered some a brief pause, Manufacturers and Retailers should be using this gift of time, to better plan.

At IRI, we’re in the advantageous position of having three key data sources that are vital to creating accurate forecasts to calculate the risks and opportunities from HFSS for Manufacturers and Retailers. These include:

  • Product level nutritional data: Allowing us to classify products as HFSS or non HFSS
  • Display location data and promotion data: Collected at product level by our in-store audit team
  • EPOS sales data: Weekly store level product data sourced directly from Retailers

Using these data sources we have solutions to help manufacturers and Retailers answer the key questions that need to be answered to successfully navigate and identify the opportunity within the HFSS restrictions:

  • How will my categories and brands be impacted?
  • How will this impact differ between supermarkets and convenience?
  • Which categories and brands drive most incremental sales when on display?
  • What will be the impact on my sales if I change my promotional plan?
  • How should in-aisle assortment alter as a result of these changes in my category?


How will HFSS regulations impact your business?

Do you have a plan to mitigate any losses or even turn the industry change to your advantage? IRI’s Impact Assessment solutions have an in-depth understanding of the impact and implications of the upcoming regulations, get in touch to discuss your challenges or watch our HFSS webinar for expert analysis on the future of the industry.

How can we help you supercharge growth and profitability?


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