10/02/2017

:00:27. > :00:32.Good afternoon. Thank you for coming to this afternoon's follow-up

:00:33. > :00:37.session on the Government's childhood obesity plan and thank

:00:38. > :00:39.you, too, to all of you for agreeing to reschedule this afternoon's

:00:40. > :00:44.session. Can you all hear me? Sorry you were

:00:45. > :00:46.indicating you couldn't hear me? Is there anything we can do about the

:00:47. > :00:51.sound levels? There is no amplification. So we are

:00:52. > :00:54.all going to have to project a bit more. Can you hear me all right now,

:00:55. > :01:00.Sir? Joonchts yes, ma'am. Right. So, before we get started,

:01:01. > :01:03.can I please ask each of the panel to introduce themselves to those

:01:04. > :01:08.following from outside the world, stating with yourself Paul Dobson

:01:09. > :01:13.son I am Professor of business Strategy and public policy and also

:01:14. > :01:18.head of Norwich Business School at the University of East Anglia. I'm

:01:19. > :01:21.dre director of the committee's of advertising practice. They are the

:01:22. > :01:26.committees that right the UK advertising codes.

:01:27. > :01:31.Thank you. Good afternoon, I'm John skad Woods, the general manager of

:01:32. > :01:37.Coca-Cola Great Britain and Ireland. I'm the deputy director for Food and

:01:38. > :01:39.Sustainability at the British Retail Consortium, the trade organisation

:01:40. > :01:46.representing the retail industry. Thank you to all of you for coming.

:01:47. > :01:53.We open the questioning. I'm wearing two hats, a Chair of

:01:54. > :01:57.this committee but also on the all-party group on adult and

:01:58. > :02:00.childhood obesity. In November 2015, this committee

:02:01. > :02:04.published their report calling for bold and brave action, do you think

:02:05. > :02:07.the Government's childhood obesity plan fulfils that call? We start

:02:08. > :02:12.with Professor Dobson? Thank you very much for the question. No, I

:02:13. > :02:18.don't think it goes far enough. I think there is one decisive measure,

:02:19. > :02:23.and it is very clear will you the soft drinks industry levy. I think

:02:24. > :02:27.there are other measures which wouldn't to provide incentives which

:02:28. > :02:33.would hopefully reduce consumption food and encourage children to

:02:34. > :02:38.undertake more physical activity but for myself I would've wanted firmer

:02:39. > :02:45.objectives, with clearly defined milestones and bench marks. I

:02:46. > :02:51.would've wanted to see some positive actions actions particularly around

:02:52. > :02:53.the retail environment, which would help consumers adjust their

:02:54. > :02:57.consumption and purchasing patterns and I'm sure there are other

:02:58. > :03:01.activities as well but my main interest is really around the retail

:03:02. > :03:10.environment and I would've liked to have seen some firmer policy

:03:11. > :03:16.measures in that context. From my perspective, the plan

:03:17. > :03:20.contains a range of measures intended to tackle obese yant we're

:03:21. > :03:25.supportive of that. In terms of my professional expertise, the plan

:03:26. > :03:28.looks forward to the work that would be undertaken in temples

:03:29. > :03:33.non-broadcast advertising of food and soft drinks high and fat, salty

:03:34. > :03:40.for children and since the plan was published, we have now introduced a

:03:41. > :03:43.been on such products in a number non-broadcast advertising.

:03:44. > :03:52.I thank you for the opportunity to be here. I talked on the committee's

:03:53. > :03:55.work gave, was well-thought through, considered and measured on a

:03:56. > :04:01.complicated, complex issue. There was a lot of things in the scald

:04:02. > :04:05.bopd and brave report. Some of which I agreed with and some of which I

:04:06. > :04:09.didn't agree with but I was surprised then when the obesity

:04:10. > :04:12.strategy Kim came out, the only concrete measure was the soft drinks

:04:13. > :04:20.industry levy, which in itself I don't think is going to make any

:04:21. > :04:23.meaningful impact on obesity rates for either children or adults. From

:04:24. > :04:27.our side I was interested to see that for the first time, the

:04:28. > :04:30.strategy uses the balance of regulation verses volume tri. With

:04:31. > :04:34.the regulatory measures on the levy, however we were a little bit

:04:35. > :04:38.dispointed that that of level of regulation was not expanded to areas

:04:39. > :04:42.of product improvement as we had been calling for. We are a little

:04:43. > :04:46.bit concerned that the plan does not specify how we are going to achieve

:04:47. > :04:57.the level playing field which we believe is so important.

:04:58. > :05:01.Thank you. I'm an ex-retailer, I spent 18 years

:05:02. > :05:06.in retail, so this next section is very important to me, really. I know

:05:07. > :05:12.all the secret ways to get people to spend more. My first question really

:05:13. > :05:16.is to Professor Dobson - does your work on the impact of retail pricing

:05:17. > :05:20.on overeating support our recommendation for action on price

:05:21. > :05:27.promotion and the promotion of food within a retail environment? Yes. It

:05:28. > :05:31.does. Let me explain what I think is the crucial issue - we have to think

:05:32. > :05:34.of the general public as both shoppers and consumers. The two

:05:35. > :05:37.things are not exactly identical. Because what people buy is not

:05:38. > :05:42.necessarily what they eat. They could be buying products for other

:05:43. > :05:47.people in the household to eat but, also, storing products that they may

:05:48. > :05:53.consume at some later point or core share but the key point about

:05:54. > :05:57.overeating starts really with overpurchasing because with wns

:05:58. > :06:00.you've bought the product, then the greater likelihood is you are

:06:01. > :06:04.actually going to consume it. This is where price something really

:06:05. > :06:06.quite vital because of all the instruments of marketing, it is

:06:07. > :06:10.actually pricing that drives the most around what West End up

:06:11. > :06:16.purchasing. So, the pricing inp sentives you put into the market and

:06:17. > :06:19.the way that you steer con-- pricing incentive you put into the market

:06:20. > :06:24.and the way you steer consumers to goods matters. So my work focuses on

:06:25. > :06:29.a quite a lot on quantity discounts. They could take various forms, in

:06:30. > :06:33.the form of multi-buys, where you, for example, buy three for the price

:06:34. > :06:38.of two. But they could be quantity discounts just on a very large

:06:39. > :06:44.container. You get a cheaper unit price than on a smaller one. That

:06:45. > :06:47.clearly steers consumers towards buying large amounts. Once they

:06:48. > :06:52.purchase the large amounts, then there is a likelihood they are going

:06:53. > :06:56.to consume those large amounts. So there is plenty of evidence that

:06:57. > :07:02.suggests that portion sizes and the way that consumers view them as the

:07:03. > :07:07.norm dictate how much they eat and we know that over time, what are

:07:08. > :07:12.perceived as the form has increased and, therefore, portion sizes, in

:07:13. > :07:14.particular, seem to be a major driver in encouraging overeating,

:07:15. > :07:21.along with snacking. Just on that point about portion sizes. Obviously

:07:22. > :07:26.in the news recently, about a certain chocolate brand making their

:07:27. > :07:32.chocolate bars forward do you think this is a good way forward? Yes.

:07:33. > :07:36.There are two aspect to this, one is whether firms do it in a sneaky

:07:37. > :07:44.fashion so, they don't actually tell you what goes on in the form of

:07:45. > :07:48.shrinkflation, so you reduce the quantity but don't inform the

:07:49. > :07:53.public, so they don't know until after they published it. There is an

:07:54. > :07:56.alternative, you could signal a size reduction and use it as marketing

:07:57. > :08:00.and say - we are doing this, because we want to reduce the number of

:08:01. > :08:03.calories that are perceived in a portion. So there is potentially two

:08:04. > :08:09.benefits that could arise. Thank you. Carrying on with this question,

:08:10. > :08:15.are there any regulatory actions which could be taken or do you think

:08:16. > :08:19.it is too difficult to find a way to curb price promotion? If I come back

:08:20. > :08:24.to the quantity discount dilemma, we see it in every retail environment.

:08:25. > :08:28.I don't just mean when you go into a supermarket and purchase. When you

:08:29. > :08:35.go into a fast-food outlet, you are face with the same issue, for a few

:08:36. > :08:40.pence more, you can get a bhoel lot more food and drink so. This issue

:08:41. > :08:44.of inconsistent unit prices prevads retail environments. You could

:08:45. > :08:48.regulate to ask that they set a common unit price, regardless of the

:08:49. > :08:54.size. That would be quite a drastic measure to do that. But there are -

:08:55. > :08:58.the ways that you could seek to control particular extreme cases, so

:08:59. > :09:01.e for example n France my understanding is they've recently

:09:02. > :09:06.banned free refills of drinks. That would be a measure. You may think

:09:07. > :09:10.that buying buy one get one free offers would solve the same problem

:09:11. > :09:14.but they could charge you an extra penny for the extra amount. So that

:09:15. > :09:20.doesn't resolve around it, there are ways to work around it. I think that

:09:21. > :09:23.adds a critical issue, you need to think through what the ramifications

:09:24. > :09:29.of any measure would be. You certainly don't want to have effects

:09:30. > :09:33.which could be dely tierous because you have not reasoned through how

:09:34. > :09:38.the venders would respond to the measureses.

:09:39. > :09:49.Does the rest of the panel want to add anything? No? If the government

:09:50. > :09:52.right to claim that a lot of forward-thinking businesses are

:09:53. > :09:59.already making changes? You have mentioned a couple. There are a

:10:00. > :10:04.number of instances where some companies have recognised that there

:10:05. > :10:09.is a direction towards encouragement towards sugar production for example

:10:10. > :10:22.all they are trying to reformulate their products, sizes accordingly,

:10:23. > :10:27.signalling a benefit. Any voluntary agreement, the problem is that

:10:28. > :10:32.companies first and foremost, profit motivated, will focus on revenue and

:10:33. > :10:39.profits. They will only go so far as it suits their bottom line. Clearly

:10:40. > :10:42.they have to think of what competitors will do if they

:10:43. > :10:49.co-ordinated move together that might not be quite a disadvantage to

:10:50. > :10:52.reducing size but if you left it to an individual firm they might be

:10:53. > :10:58.reluctant to do it until other firms follow suit and this is where

:10:59. > :11:02.government policy can act as a co-ordinator, overcoming natural

:11:03. > :11:07.competition through lack of coordination because you are

:11:08. > :11:10.requiring the industry to move in that way. This is what is

:11:11. > :11:15.interesting about the soft drinks levy. It applies to the industry

:11:16. > :11:24.together so they will all have to respond than take account of that

:11:25. > :11:34.measure. Leading the way for years in the way of nutrition values, in

:11:35. > :11:38.terms of whether changes have been introduced in areas like marketing

:11:39. > :11:46.and promotions our members have been trying hard to move away from

:11:47. > :11:49.certain type of marketing and promotion that customers do not one

:11:50. > :11:55.announcements have been made by a number of our members in the press,

:11:56. > :12:02.moving away from buy one get one free. There has been progress. Some

:12:03. > :12:04.of those shows in the figures. When the committee met last the evidence

:12:05. > :12:10.from Public Health England had just been published and 40% of food was

:12:11. > :12:22.being sold on promotion and the latest figures show a deep case in

:12:23. > :12:28.-- a fall down to 27%. There has been a move away from promotions and

:12:29. > :12:34.certain types of promotions. There has been changed taken by individual

:12:35. > :12:40.companies. Do you have any evidence that the government's action will

:12:41. > :12:43.accelerate a shifting market? For the purpose of achieving that level

:12:44. > :12:47.playing field and getting everybody to the same, there needs to be

:12:48. > :12:54.intervention. Last couple of questions. To the same panel

:12:55. > :12:59.members. What more could or should the retail industry be doing to

:13:00. > :13:04.reduce the impact on purchase of unhealthy food? Turning it on its

:13:05. > :13:13.head, what more could be done to make sure that people promote

:13:14. > :13:20.healthy food options? Do you want to go first? One of the issues is about

:13:21. > :13:24.these quantity discounts. You have to ask yourself why it is mostly

:13:25. > :13:29.unhealthy foods you get this. This is because of the nature of the

:13:30. > :13:34.dilemma in the consumer's mind. They want to have a bargain so tempted to

:13:35. > :13:42.go large but the angel on their shoulder is suggesting that they

:13:43. > :13:46.restrain from how much they purchase and consume. It is because of that

:13:47. > :13:53.tension that you get these incredibly different unit prices.

:13:54. > :13:56.One example, if you went to a very well-known large retailer today and

:13:57. > :14:00.purchased a very well-known carbonated drinks brand you would

:14:01. > :14:08.see a fourfold difference in the unit price between a small size and

:14:09. > :14:15.a large size or multi-buy. That kind of incentive, even on an unhealthy

:14:16. > :14:20.product, is going to drive bargain hunters to purchase that, the

:14:21. > :14:26.extremity of that. Or unhealthy foods you do not tend to see that,

:14:27. > :14:31.one reason is the products are often perishable. We all about their

:14:32. > :14:34.products of not consuming fresh fruit and vegetables quickly, they

:14:35. > :14:40.will perish and end up being thrown away. That limits them to some

:14:41. > :14:44.extent but equally there is not this kind of tension in somebody's mind

:14:45. > :14:50.about the difference between wanting a bargain but knowing that actually

:14:51. > :14:54.it could be harmful. You will always get this problem with unhealthy

:14:55. > :14:58.products. There will be this tension. There is a further aspect

:14:59. > :15:03.unhealthy products and that is that they tend to have expandable demand.

:15:04. > :15:14.That is where you see those products which have the largest proportion of

:15:15. > :15:18.sales driven by promotions on price because they are expandable and

:15:19. > :15:24.consumers will grab bargains. Price promotions lies at the heart of this

:15:25. > :15:31.problem in the retail environment. Do you have anything to add? Every

:15:32. > :15:37.single retailer has an internal policy that would make them balance

:15:38. > :15:41.the quantity of products, if you want to describe them as high fat,

:15:42. > :15:48.sugar and salt, and every retailer has a commitment to promote

:15:49. > :15:54.healthier moderates. That was incredibly obvious over Christmas

:15:55. > :15:59.when there was a price war over the vegetables that were to be used in

:16:00. > :16:03.the Christmas dinner. It was one of the first time where there was a

:16:04. > :16:07.real place war over carrots for example and that was certainly well

:16:08. > :16:13.received by customers. The percentage of customers at the

:16:14. > :16:17.acceptability of what customers want to see has changed and with that the

:16:18. > :16:21.manner and type of products being promoted and how they are being

:16:22. > :16:26.promoted by the majority of members are looking at different ways of

:16:27. > :16:34.positively promoting and providing information on healthier products.

:16:35. > :16:38.We have heard a lot in the press and media focusing on products displayed

:16:39. > :16:43.at the checkout. I saw a study that says that we collectively purchase a

:16:44. > :16:48.third of our sugar and saturated fat as a result of the products we see

:16:49. > :16:56.on end of while promotions. Would you call that? -- agony. Should

:16:57. > :17:06.there be a different area to focus on? Interesting question. Part of

:17:07. > :17:17.the importance of place within the retail environment and what we see.

:17:18. > :17:22.End of isles, they are noticeable and we have to navigate around them

:17:23. > :17:29.and they draw our attention and that lends itself to the possibility of

:17:30. > :17:33.impulse purchases. Up to 40% of what consumers buy is an impulse

:17:34. > :17:38.purchase. That means that when they go into a supermarket we typically

:17:39. > :17:41.have a mental shopping list or maybe a written shopping list but in

:17:42. > :17:46.addition to that we will make purchases on the spur of the moment

:17:47. > :17:51.depending on what we see. Those signals of them come with bright

:17:52. > :17:58.yellow, orange and red signs grabbing our visual attention but

:17:59. > :18:02.there is often framing, that when we see 50% off, 40% off, it attracts as

:18:03. > :18:06.as a potential bargain because of that framing and we end up putting

:18:07. > :18:12.those products in our shopping baskets as a result. I have

:18:13. > :18:17.understood cases that I have looked at as part of my analysis that there

:18:18. > :18:25.has been a 30 fold increase because of products being put on the end of

:18:26. > :18:31.isles. The volume increase could be massive on these displays and could

:18:32. > :18:40.be particularly successful if placed in a position very well. Did you

:18:41. > :18:49.have a follow-up question? I did and I have some questions on

:18:50. > :18:52.advertising. I have one as well. Could you go further? You have

:18:53. > :18:57.touched on a couple of things in what you feel the government, what

:18:58. > :19:05.further action you would like to see in terms of creating a level playing

:19:06. > :19:07.field. The level playing field aspect is important whenever you

:19:08. > :19:14.look at agreements with the industry. If I am honest one of the

:19:15. > :19:21.problems with the responsibility deal is it was bilateral, agreed

:19:22. > :19:25.between... As part of the deal, with the manufacturer or individual

:19:26. > :19:30.retailer what would happen. To be honest, the incentive to come

:19:31. > :19:34.forward with such an offer to reduce the amount of sugar in your products

:19:35. > :19:38.or price it in a particular way is only going to come about if it is in

:19:39. > :19:44.your individual interest to do that. There is this collective problem.

:19:45. > :19:52.Anything which helps coordinate, I will qualify this, action which

:19:53. > :19:55.leads to a benefit, whether it be re-formulation or changing in the

:19:56. > :19:59.pricing structure, is to be welcomed. The caveat is you do not

:20:00. > :20:09.want to coordinate in the wrong direction. For example if you

:20:10. > :20:13.imposed a tax on ingredients like sugar so all sugar products become

:20:14. > :20:19.higher price than the worry would be Edward coordinate prices on

:20:20. > :20:23.non-sugar products. You get an umbrella pricing problem. You raise

:20:24. > :20:29.the prices of some products and that reframes the prices of others which

:20:30. > :20:33.softens competition to raise them. You have to think through what

:20:34. > :20:39.coordination effects are. You want them to be beneficial and not work

:20:40. > :20:46.against you. In terms of things like price promotions and activities,

:20:47. > :20:52.there are ways to do that to encourage. My big issue is the

:20:53. > :20:56.volume of what we purchase. I believe consuming all goods and

:20:57. > :21:01.moderation cannot be that harmful, it is consuming in excess, so we

:21:02. > :21:07.have to work on aspects. There has been a movement of some retailers

:21:08. > :21:10.moving away from multi-buys, but if that is replaced with one-off

:21:11. > :21:15.discounts on large volumes it is not going to be helpful either. It is

:21:16. > :21:27.around coordination to get the ideal benefits. Is there anything you

:21:28. > :21:34.would like to add? I have a short follow-up on this issue. It is to do

:21:35. > :21:38.with the nontraditional outlets where you might go into a garage to

:21:39. > :21:43.buy petrol but to come out with a bag of doughnuts because it is

:21:44. > :21:50.placed at the counter. I wonder what assessment has been done about the

:21:51. > :21:53.extent to which those impulse buys not in the supermarkets can have a

:21:54. > :21:58.detrimental effect and what of anything you believe should be done

:21:59. > :22:06.to tackle something like that? Yes. I have been guilty of this myself, I

:22:07. > :22:14.confess. Expertise does not stop you being tempted. I have not seen a

:22:15. > :22:17.particular study. I am aware of different retail environments where

:22:18. > :22:21.there is an incentive to make an add-on sale so you comment by one

:22:22. > :22:26.thing like a newspaper and you are giving a deal on buying a bar of

:22:27. > :22:32.chocolate and it is the same with doughnuts on top of petrol. All

:22:33. > :22:37.retailers are trying to create sales if they enhance profits or generate

:22:38. > :22:42.repeat business. That is one of the other benefits promotions,

:22:43. > :22:47.encourages loyalty. There are aspects around that. It is worrying

:22:48. > :22:52.yet again we see an example of an expandable demand product, in this

:22:53. > :22:56.case doughnuts, where if temptation will allow us to make that purchase,

:22:57. > :23:02.where if it was a healthy purchase we might not choose to the same

:23:03. > :23:06.extent. We are caught in an environment where we are directed to

:23:07. > :23:11.a product we were not miss a thoroughly expecting to be that,

:23:12. > :23:17.there may not be an alternative healthy option, so we are steered to

:23:18. > :23:20.making that purchase. It applies in that unconventional shopping

:23:21. > :23:21.environment for food as much to a shopping environment in a

:23:22. > :23:29.supermarket. You could equally make similar

:23:30. > :23:34.cases, for example, in fast-food outlets where you might go in for

:23:35. > :23:40.one products but are tempted by the value deal that is on offer for the

:23:41. > :23:44.entire meal. As a bundle deal. It is exactly the same problem, they are

:23:45. > :23:50.encouraging you to add on an extra purchase.

:23:51. > :23:54.Moving to advertising, if I could just ask you a couple of quick

:23:55. > :24:00.questions. Public Health England made a whole range of

:24:01. > :24:09.recommendations about changes to advertising with respect to high

:24:10. > :24:13.sugar and fat products, salt products. I know you have announced

:24:14. > :24:18.some new initiative back in December, I think it was, could you

:24:19. > :24:23.just explain to me what was recommended by Public Health England

:24:24. > :24:29.that you have not taken account of in the announcement that she made in

:24:30. > :24:34.December? -- that you made? I am not sure we

:24:35. > :24:40.have done an evaluation with what we came out with contends of everything

:24:41. > :24:45.that Ph.D. Said, we took their review into account and we look at

:24:46. > :24:51.the evidence of advertising on children's food preferences. In

:24:52. > :24:55.general terms we have a legal obligation to try to balance

:24:56. > :24:59.commercial free speech with restrictions that are necessary,

:25:00. > :25:03.particularly pertinent, of course, in terms of our democratic society

:25:04. > :25:09.because advertising helps to pay for some of the things that we enjoy. We

:25:10. > :25:15.did an evidence -based review, taking into account the PHE's

:25:16. > :25:20.concerns, we concluded that whilst the evidence of advertising's impact

:25:21. > :25:25.on children's food preferences has not changed, context certainly has

:25:26. > :25:27.the context in which we view the evidence certainly has, most

:25:28. > :25:31.significantly in nonbroadcast advertising where we have seen the

:25:32. > :25:34.role of the Internet in children's lives. Today children spend more

:25:35. > :25:39.time online than watching television. TV is still holding up,

:25:40. > :25:45.they are still watching it but they are adding to that their viewership

:25:46. > :25:51.of online material as well. That has fundamentally changed. Whilst, as I

:25:52. > :25:57.say, the evidence shows a modest effect on children's viewing

:25:58. > :26:01.practices and simmering towards their diet, there is no digestion of

:26:02. > :26:04.a direct link with obesity itself. Unless we thought because of the

:26:05. > :26:08.changing circumstances it was appropriate to announce in December

:26:09. > :26:18.from July this year we will be introducing a ban on certain product

:26:19. > :26:21.adverts in all children's nonbroadcast media, which brings

:26:22. > :26:27.that into line with the TB restrictions that have been placed

:26:28. > :26:31.for the last ten years. -- with the TV restrictions. One suggestion in

:26:32. > :26:39.the past has been that you extend a ban on advertising of high sugar,

:26:40. > :26:43.salt and fat products. Up to the 90 watershed. That is to take account

:26:44. > :26:47.of the programmes that children might be watching, but lots of

:26:48. > :26:51.adults might be watching as well -- up to the 9pm watershed. Is that

:26:52. > :26:57.something you will consider, because you have not taken that step today?

:26:58. > :27:05.The consultation was from the nonbroadcast body. In terms of our

:27:06. > :27:08.general approach to this, we have a genuine concern to put the

:27:09. > :27:18.protection of children first, but that has to be mindful of avoiding

:27:19. > :27:27.inefficient, unwarranted or perhaps even counter-productive restrictions

:27:28. > :27:33.in terms of advertising. Between 2004 and 2007, Ofcom undertook the

:27:34. > :27:38.most there are exploration of this type of advertising and it concluded

:27:39. > :27:40.that it was merited to place a ban within children's programmes and

:27:41. > :27:47.programmes of particular appeal to children. It considered that further

:27:48. > :27:51.restrictions were not warranted because of two things, first of all

:27:52. > :27:59.that the public health benefits were uncertain and the cost of extra

:28:00. > :28:03.regulations were, in the view of Ofcom, too great. For example, a 9pm

:28:04. > :28:11.restriction, off, calculated that would lead to a loss of broadcast

:28:12. > :28:17.revenue to the tuna ?211 million net, which clearly has consequences

:28:18. > :28:19.for UK original programming, including children's programming.,

:28:20. > :28:29.was concerned about the blunt instrument of nine watershed. Off,

:28:30. > :28:33.lets many channels which have a negligible child audience and it

:28:34. > :28:37.would seem unwarranted to impose restrictions on them. To the

:28:38. > :28:42.broadcast committee of advertising practice has not seen evidence in

:28:43. > :28:49.order to convince itself that it should challenge the conclusion that

:28:50. > :28:53.Ofcom came to. But they are open to new evidence. Basically you are

:28:54. > :28:58.saying that the broadcaster's bottom line is more important than

:28:59. > :29:03.children's waistlines? Absolutely not, we are saying that we have a

:29:04. > :29:08.legal obligation to balance the protection of children together with

:29:09. > :29:13.commercial freedom of speech. What we can do is put in place

:29:14. > :29:18.disproportionate and unjustified regulation. Ofcom's concern was to

:29:19. > :29:21.reduce children's exposure to this type of appetising, and it feels

:29:22. > :29:27.that the measures were proportional to do so. -- this type of

:29:28. > :29:30.advertising. To go beyond these measures, it was felt that the

:29:31. > :29:35.public health benefits would be too uncertain from that and the loss of

:29:36. > :29:44.revenue to broadcasters would be too great. The public health benefits on

:29:45. > :29:50.that, Ofcom found through its research that there was only a

:29:51. > :29:54.modest direct influence on children's food preferences arising

:29:55. > :29:58.out of television advertising, therefore if one was to eliminate

:29:59. > :30:04.all of this appetising from the schedule, one would only be

:30:05. > :30:07.eliminating a modest direct influence on their preferences, so

:30:08. > :30:12.clearly that was unwarranted to have such a level of restriction, which

:30:13. > :30:17.is why it concluded overall that a restriction on children's

:30:18. > :30:21.programming was appropriate. Just to ask you about the

:30:22. > :30:28.restrictions which you have announced nonbroadcast advertising,

:30:29. > :30:33.in the cinema and online, as I understand it, a threshold applies

:30:34. > :30:41.with regard to the proportion of the audience which is children. Can you

:30:42. > :30:44.just explain exactly how that would work, and whether you have any

:30:45. > :30:53.intentions to go further in that regard? The proportion we propose is

:30:54. > :30:57.25% rule, what we do is we reverse the burden of proof, we invite get

:30:58. > :31:02.the tasered to prove to the ASA that it is scheduling or placing this

:31:03. > :31:07.appetising appropriately and it can use various measures to relate to

:31:08. > :31:11.the ASA what it believes the audience composition of that

:31:12. > :31:17.particular mediators. In most cases it is quite clear where media is

:31:18. > :31:21.director just to a child audience or to a predominantly adult audience.

:31:22. > :31:26.In borderline cases the ASA requires advertisers to substantiate what the

:31:27. > :31:33.audience profile of that is, and where over 25% of the audience is

:31:34. > :31:37.aged under 16, they cannot place adverts for these products in the

:31:38. > :31:43.media. How will this be enforced online? It

:31:44. > :31:48.is already in force. We have had the 25% rule in place for some time, the

:31:49. > :31:57.ASA has been regulating online advertising for nigh on 20 years

:31:58. > :32:01.now, and since 2011 it as regulated online advertising in non-pay for

:32:02. > :32:06.space on social media and apps, for example. The 25% rule also applies

:32:07. > :32:11.to gambling and alcohol products, they cannot be shown where more than

:32:12. > :32:16.25% of the audience are aged 18 or younger. It has already been

:32:17. > :32:20.applied. Advertisers understand that when the contract with media they

:32:21. > :32:25.had to know the ordinance profile of that media. -- the audience profile.

:32:26. > :32:30.In the case of inappropriately placed advertising we would ask the

:32:31. > :32:35.advertiser to substantiate the audience profile.

:32:36. > :32:40.It is a very high bar, 25%, that is quite some demand to bring the bar

:32:41. > :32:49.down from 25%? It is a very high threshold? For children, 25% of the

:32:50. > :32:54.audience being under 16, do you feel there was a case... Did you look at

:32:55. > :32:59.bringing back down? We did not get a lot of pushback in consultation for

:33:00. > :33:03.lowering the bar, 25% is a figure known to advertisers and seem to

:33:04. > :33:08.work. Looking at it through the other end of the telescope, what

:33:09. > :33:11.that would do would be to ban this sort of advertising in media where

:33:12. > :33:19.up to 75% of the audience were adults. I think it is felt that

:33:20. > :33:23.extending back to 80, 90% or higher of adults would be disproportionate

:33:24. > :33:27.given the added an -- evidence of the impact of advertising on

:33:28. > :33:33.children's food preferences. Can I ask how much is spent in the United

:33:34. > :33:39.Kingdom on advertising, particularly advertising these kinds of products?

:33:40. > :33:44.Do you have any sense? I am afraid I don't know. You don't know that

:33:45. > :33:49.figure. I know it is a considerable sum, we had it when we did being

:33:50. > :33:53.Majri the first time, so I can't member, but you are suggesting that

:33:54. > :33:58.advertising did not work and we should not be worried about

:33:59. > :34:01.advertising high fat and sugary foods to children because

:34:02. > :34:05.advertising does not really influence them. As someone involved

:34:06. > :34:08.in advertising, I am sure you are really not trying to send out the

:34:09. > :34:14.message that advertising does not work? I am involved in the

:34:15. > :34:21.regulation of appetising, and both are legal duties and responsibility

:34:22. > :34:25.is to prevent advertising that lead to misleading, harmful or offensive

:34:26. > :34:28.information. We are concerned about the potential harm that might arise

:34:29. > :34:33.from the advertising of these sorts of products and what could be

:34:34. > :34:38.responsible measures to mitigate that harm. The evidence of

:34:39. > :34:43.appetising's impact suggests there is a modest direct influence on

:34:44. > :34:52.children's food preferences and some link with children's diets. The

:34:53. > :34:57.evidence is out as to what that contributes to obesity. We are not

:34:58. > :35:01.saying it does not have effect, quite the opposite, albeit a modest

:35:02. > :35:06.one, together with stubbornly high rates of child obesity that we have

:35:07. > :35:09.in this country, we need to form a restriction which includes both

:35:10. > :35:14.restrictions on the placement and scheduling of adverts and on the

:35:15. > :35:18.contact -- content of adverts. Rule still prevent children from seeing

:35:19. > :35:22.adverts in other media, but where they do see those adverts we have

:35:23. > :35:26.rules in place ensuring they do not encourage and in healthy lifestyle

:35:27. > :35:32.in children or invite them to pester their children about products etc.

:35:33. > :35:35.-- they do not encourage and unhealthy lifestyle in children or

:35:36. > :35:39.invite them to pester their parents about products etc. We think this

:35:40. > :35:44.appropriately mitigate the potential harm that can arise. Do you think

:35:45. > :35:50.the balance is right, parents do not get pestered to buy whatever, not to

:35:51. > :35:54.name any products? How does a regulated know they have the balance

:35:55. > :35:59.right? Spend some time in the supermarket listening to children

:36:00. > :36:03.nagging their parents, can I have this, can I have that? Where did

:36:04. > :36:10.they get the name of that cereal, drink, chocolate bar if they have

:36:11. > :36:13.not seen the appetising? We do not regulate retail in-store. At the

:36:14. > :36:18.child comes into the store knowing the name of what they want, so to

:36:19. > :36:21.suggest that advertising is not having an effect on the children

:36:22. > :36:25.nagging the parent. As somebody who has struggled with her weight since

:36:26. > :36:29.mid-teens I would not think there was some charming adults having a

:36:30. > :36:35.little bit less high-fat and sugar advertising put into their nose,

:36:36. > :36:41.either. -- I would not think there was some harm in adults having. Were

:36:42. > :36:44.concerned that any advertising... Sorry, any regulation should not

:36:45. > :36:51.have unwarranted intrusion into adult viewing time. That would be

:36:52. > :36:55.our concern as well in terms of non-broadcast. How does it inhibits

:36:56. > :37:03.the pleasure of viewing the programme to have maybe fractionally

:37:04. > :37:09.fewer HFSS adverts? We don't advertise cigarettes or drink, we

:37:10. > :37:13.try to tackle something that is now a public health issue. Lots of

:37:14. > :37:19.adults just fast forward through the adverts. Going back to our legal

:37:20. > :37:23.responsibility, there is a writer for commercial free speech and for

:37:24. > :37:29.people to receive information about products that might be of interest

:37:30. > :37:35.to them. That is, of course, important in terms of adults

:37:36. > :37:40.receiving such information. So you think the adverts work on adults but

:37:41. > :37:45.it does not have a big impact on children? I think the adverts do

:37:46. > :37:49.work, both on children and adults, but we are talking about effect in

:37:50. > :37:53.terms of food preferences. The concern here is more about obesity

:37:54. > :37:58.and there are clearly more primary factors involved in the causes

:37:59. > :38:03.underlying obesity, parenting, schools policy, public understanding

:38:04. > :38:06.of nutrition etc. Public Health England put advertising and

:38:07. > :38:12.promotion as the top two when they give evidence to us, they say the

:38:13. > :38:16.evidence showed... Higher than the sugar levy, number four, I think,

:38:17. > :38:22.was advertising and promotion, both of which are not really much in the

:38:23. > :38:27.new strategy. I can't speak for the new strategy but I can say we think

:38:28. > :38:30.advertising has a role to play, we think advertising regulation is

:38:31. > :38:34.playing its role in putting in a very strict balance, some of the

:38:35. > :38:37.toughest in the world, in terms of appetising for HFSS products to

:38:38. > :38:41.children and broadcast and non-broadcast, so from July this

:38:42. > :38:44.year, all media directed to children will not be able to... At some

:38:45. > :38:51.countries don't have anything like this before the 9pm watershed. So we

:38:52. > :38:53.can't be the strictest in the world, if there are countries that do not

:38:54. > :39:02.advertise on television before 9pm? We are among the strictest in the

:39:03. > :39:12.world and that is the language of the strategy. You had a follow-up.

:39:13. > :39:17.Do you accept or does the adverse died in standard laboratory except

:39:18. > :39:24.that while in proportion terms fewer children might be exposed to adverts

:39:25. > :39:31.of foods high in fat, sugar and salt on both broadcast and nonbroadcast

:39:32. > :39:33.in absolute terms there are plenty of examples, larger numbers of

:39:34. > :39:46.children would be exposed to these adverts? That is clearly the case.

:39:47. > :39:50.Ofcom's prerogative and ours was was to introduce rules that

:39:51. > :40:02.significantly reduce children's exposure to advertising. Clearly by

:40:03. > :40:09.banning HFSS ads we are reducing exposure. Media which is popular and

:40:10. > :40:17.attracts a large childhood audience, delivering a handful of adds to

:40:18. > :40:19.them, our view is that the measures we have putting place have

:40:20. > :40:28.significantly reduced children's exposure. I do not know if it is

:40:29. > :40:32.because of the non-fragmentation of broadcast media we have precise

:40:33. > :40:37.figures on what would be the reduction in children's exposure to

:40:38. > :40:43.nonbroadcast HFSS adverts. Will there be times when children still

:40:44. > :40:53.see adverts? Yes. Content restrictions are in place. For under

:40:54. > :41:01.12 is, any HFSS adverts cannot include promotions or celebrities

:41:02. > :41:07.popular with children. I was watching Saturday night television

:41:08. > :41:10.the other week and I counted seven adverts that are high in fat sugar

:41:11. > :41:15.and salt in one segment of advertising on The Voice. I know

:41:16. > :41:22.from audience figures that the threshold... It is below the

:41:23. > :41:25.threshold, it is the proportion, but total numbers are thousands of

:41:26. > :41:33.thousands of children exposed to these adverts. What is your view on

:41:34. > :41:37.the impact? I would probably go back to Ofcom's consultation and its view

:41:38. > :41:41.was that restrictions beyond those that are proposed around children's

:41:42. > :41:47.programming were not merited on the basis that public health was

:41:48. > :41:54.uncertain from restrictions and the lot of broadcasters was too great

:41:55. > :41:56.including the loss in terms of reduction in UK originated

:41:57. > :42:03.programming including children's programming. I imagine the committee

:42:04. > :42:07.are passionate about programming in the regions and what might happen to

:42:08. > :42:11.our advertising sector but we are equally if not more concerned about

:42:12. > :42:15.the burden the NHS had to contend with as a result of that advertising

:42:16. > :42:23.and wonder what the view is of how we reconcile both two contrasting

:42:24. > :42:29.and conflicting differences. I have been speaking for a long time. Our

:42:30. > :42:33.concern would be that if the evidence suggested that advertising

:42:34. > :42:38.had a greater effect on children's food preferences and the evidence

:42:39. > :42:42.seems to suggest I think I have much greater sympathy with that view.

:42:43. > :42:46.Evidence suggests that it has a modest impact on children's food

:42:47. > :42:51.preferences, some length with children's diet but the evidence

:42:52. > :42:55.falls short of establishing a link with obesity. The calculation that

:42:56. > :43:07.seeing adverts equals obesity is not proven. Multiple and complex

:43:08. > :43:10.factors, schools policy, parental, public understanding of the

:43:11. > :43:19.division, perhaps more in the dock and advertising. Does anyone else

:43:20. > :43:24.want to respond? I would not put the benefits of advertising above the

:43:25. > :43:31.health of our children. That is the last thing I'd want to do. We have

:43:32. > :43:36.tried advertising control, a global standard, the UK's tight advertising

:43:37. > :43:44.market. We are compliant with all of the gods and practices that exist

:43:45. > :43:51.and have been very supportive of the latest change particularly trying to

:43:52. > :43:57.bring that cold in line with the broadcast code is important. It is

:43:58. > :44:01.difficult to understand exactly how you prevent it happening online. It

:44:02. > :44:07.is a much more difficult environment. I do not have an answer

:44:08. > :44:12.how to make it better online. It think it is better on broadcast TV,

:44:13. > :44:17.much tighter ability to regulate, but if you look at where children

:44:18. > :44:22.are consuming media, it is increasingly online so it is

:44:23. > :44:27.important we have brought the codes together. As a company we would go a

:44:28. > :44:32.step further, the vast majority of her marketing money goes behind zero

:44:33. > :44:37.sugar and zero calorie variants to try to encourage it. I am conscious

:44:38. > :44:41.of the issue around high fat, sugar and salt and we have deliberately

:44:42. > :44:48.changed the way in which we do our marketing to try to support zero

:44:49. > :44:51.sugar variants much more to encourage people to make some

:44:52. > :44:59.lighter choices of that is what they want to do. To conclude, does that

:45:00. > :45:06.than you have mentioned that is going to be introduced on all

:45:07. > :45:11.nonbroadcast media extent to games and apps connected to foods that are

:45:12. > :45:21.high in fat, sugar and salt? Very much so. Anything tied to a

:45:22. > :45:30.childhood audience. Does that mean the food companies themselves cannot

:45:31. > :45:34.sponsor those games? Correct. The soft drinks industry levy is perhaps

:45:35. > :45:40.the eye-catching element of the childhood obesity plan published by

:45:41. > :45:44.the government. Something that we as a committee supported, albeit in a

:45:45. > :45:50.different form. What would you say is likely to be the impact of the

:45:51. > :45:57.levy on the soft drinks industry? I know that it was part of the

:45:58. > :46:03.committee's report and it became the only hard and fast action that I can

:46:04. > :46:08.see in the charter strategy as it came out. I do not think it is an

:46:09. > :46:13.effective measure on its own for tackling obesity rates of childhood

:46:14. > :46:17.obesity rates. If you look at the soft drinks industry over the last

:46:18. > :46:21.decade and the shape of their soft drinks industry and how it has

:46:22. > :46:25.changed, it is remarkable. If you turn back the clock ten years we

:46:26. > :46:32.were selling three regular sugared soft drinks for everyone zero sugar

:46:33. > :46:38.or diet drink and today it is 1-1. That is a massive shift in the

:46:39. > :46:44.make-up of the industry. Selling 44% less sugared soft drinks today than

:46:45. > :46:49.a decade ago. Yet obesity rates are up. It is hard to draw a causal link

:46:50. > :46:55.solely between soft drinks consumption and obesity rates. The

:46:56. > :47:06.levy itself is designed to encourage reformulation. The report in the

:47:07. > :47:10.area of obesity I have felt most affinity with this the Mackenzie

:47:11. > :47:12.Institute report and it said there were two primary things

:47:13. > :47:18.manufacturers could do, one was reformulate products and the other

:47:19. > :47:23.was portion sizes which poll has referred to. On reformulation the

:47:24. > :47:27.soft drinks industry has been on a very rapid process of re-formulating

:47:28. > :47:32.products without a levy. We are competing ultimately in the

:47:33. > :47:35.marketplace to provide drinks that people want to buy and increasingly

:47:36. > :47:41.people want to buy lower sugar low calorie drinks so we are competing

:47:42. > :47:46.and the market is encouraging us to change recipes and reduce sugar

:47:47. > :47:51.content and I am sure that will continue. As a company I do not

:47:52. > :47:54.think it is going to persuade me to do something I was not planning to

:47:55. > :47:57.do something already because we were planning to be the formulating

:47:58. > :48:04.products, changing recipes, and indeed since I started we have

:48:05. > :48:11.reformulated 28 of our leading drinks, it reducing sugar and

:48:12. > :48:15.calories, and 50% of what we sell is zero calorie. Reformulation is being

:48:16. > :48:25.done already. Portion control of the other big thing. From the Mackenzie

:48:26. > :48:33.work it seemed top of manufacturers. It will have less impact on portion

:48:34. > :48:36.control. Man on reformulation. Could I extend the question in terms of

:48:37. > :48:44.the British Retail Consortium's stance? We did not express a very

:48:45. > :48:47.strong view either way when the levy was suggested. We have accepted it

:48:48. > :48:52.and never really expressed disappointment of support, we

:48:53. > :48:56.accepted the measure was coming in and our response to the consultation

:48:57. > :49:01.focused on the practical implications, definitions, scope and

:49:02. > :49:09.so on. I agree with everything John has said, both drinks has been one

:49:10. > :49:16.of the categories in which most work has been done in terms of sugar

:49:17. > :49:20.production. A number of the members are working or have stepped up the

:49:21. > :49:33.reformulation approach to soft drinks ahead of the levy in 2018. If

:49:34. > :49:40.you could also give your views with regard to impact on the industry but

:49:41. > :49:44.also on public health. Thank you for asking me the question. It is

:49:45. > :49:52.something I have reflected on and done research on. I come back to two

:49:53. > :49:58.points. I raised one when I was talking about umbrella. If you set

:49:59. > :50:04.the levy to Lord then you the price of sugared drinks but not so high

:50:05. > :50:10.that it may deter people buying and equally you make to provide

:50:11. > :50:15.incentives for non-sugar reduced sugared drinks to sit under that

:50:16. > :50:19.umbrella of the higher price. You could end up raising all prices

:50:20. > :50:22.which is not the desired effect. The desired effect is maths

:50:23. > :50:28.substitution, to get consumers to move from buying sugared products to

:50:29. > :50:34.zero sugar products. Pricing incentives have to be right. Be

:50:35. > :50:39.clear. I do not want to punish the industry by arguing for a high levy,

:50:40. > :50:43.I just want to make sure that they actually do formulations and

:50:44. > :50:50.consumers shift to those re-formulations. The secondary

:50:51. > :50:54.aspect, the higher you make the levy, the more difficult it is to

:50:55. > :50:57.give a really generous bargain discount on larger quantities

:50:58. > :51:02.because those large quantities of also got to carry the levy into them

:51:03. > :51:07.as well. I see a double benefit of the high levy. Firstly you raise

:51:08. > :51:15.prices in such a way that it steers consumers to buying the reformulated

:51:16. > :51:20.products. Secondly it reduces the generosity of the quantity discounts

:51:21. > :51:28.simply by virtue of those larger quantities having to pass on the

:51:29. > :51:34.levy you are raising. What is your view in terms of the way it has been

:51:35. > :51:38.designed and tiered? There are two alternatives. One is to introduce

:51:39. > :51:42.the levy on the manufacturers and importers which is the route that

:51:43. > :51:47.has been proposed and chosen. Secondly you could introduce it

:51:48. > :51:51.through a value-added tax at retail level. I have argued that the

:51:52. > :51:58.appropriate level is so directed towards manufacturers and treated

:51:59. > :52:01.almost as an excise duty like alcohol. Because of this problem

:52:02. > :52:09.that when it comes to retail pricing the retailer will steer consumers

:52:10. > :52:13.towards taking very large volumes of drinks and if you are only doing

:52:14. > :52:18.that percentage basis on that you are not achieving what you want to

:52:19. > :52:22.do, in fact you might encourage more consumption. I can see a perverse

:52:23. > :52:28.effect of that was applied at retail level. I am well aware that there is

:52:29. > :52:32.no guarantee necessarily that retailers will pass on the levy in

:52:33. > :52:40.the percentage amount that is expected, they could pass on more or

:52:41. > :52:45.less. If you set the level high enough, one way or another they have

:52:46. > :52:49.to pass it on. They cannot cross subsidise with other products, that

:52:50. > :52:57.would be a risk I would be concerned about. What do you think the level

:52:58. > :53:00.needs to be said that is? The Office for Budget Responsibility has

:53:01. > :53:04.estimated that it might equate to 18p per litre or 24p per litre

:53:05. > :53:07.depending on the concentration of sugar.

:53:08. > :53:17.I think that is the minimum. If you really wanted to be effective, those

:53:18. > :53:20.are what we want in encouraging reformulation and encouraging

:53:21. > :53:25.substitute products, I would look at a double. That would make a very

:53:26. > :53:31.profound effect and act as a really clear signal to everybody, that is

:53:32. > :53:36.the general public, consumers making purchases, as well as the industry.

:53:37. > :53:41.I know it sounds drastic and hard hitting the industry, but as I think

:53:42. > :53:45.we have already heard from John, for the industry, they are moving in the

:53:46. > :53:49.direction anyway of reducing sugar in drinks. If you structure it

:53:50. > :53:55.right, all it will do is accelerate that reformulation and move towards

:53:56. > :54:00.less sugar consumption. I know you doubt the effectiveness

:54:01. > :54:05.of this whole idea in any case, but what level do you think the lobby

:54:06. > :54:10.would have to be set out to have an impact of some kind? I don't know, I

:54:11. > :54:16.think it is a hypothetical question. I am not sure I am particularly well

:54:17. > :54:26.placed to guess what level you are looking for. I would say it is a

:54:27. > :54:32.pretty hefty levy exactly as it is. On a sector of our food consumption

:54:33. > :54:39.and drink consumption where sugar is collapsing as a percentage, down 44%

:54:40. > :54:43.in the last decade. And by every measure, manufacturers like Koepka

:54:44. > :54:51.are doing the right thing and taking things out of their products. --

:54:52. > :54:55.manufacturers like Coke. The total sugar consumption is not declining

:54:56. > :55:01.at the rate that it is from soft drinks. So it seems strange to me

:55:02. > :55:04.that a ban on what is already an extensive levy by international

:55:05. > :55:10.standards on the one part of the food and drink industry where sugar

:55:11. > :55:15.has really fallen fast. Assuming the levy goes ahead next

:55:16. > :55:20.year, what encouragement can you give that the associated cost will

:55:21. > :55:24.actually be passed on those consuming the high sugar drinks in

:55:25. > :55:29.particular, as opposed to other drinks within your brand? I can't

:55:30. > :55:34.make many specific references to retail pricing -- I can't make any.

:55:35. > :55:38.Prices in stores are at the discretion of the retailer, not

:55:39. > :55:40.bound by manufacturers. I would observe that it is a very

:55:41. > :55:47.significant additional cost to my business. I am in business and need

:55:48. > :55:52.to recover my costs. So between that and the other costs we are having

:55:53. > :55:57.added to our business over the next year also, I will seek to make sure

:55:58. > :56:01.those costs get covered. Sorry, can I just clarify, we have

:56:02. > :56:04.heard about it being an umbrella costs spread over your entire

:56:05. > :56:10.product range, we have heard very clear evidence that it... For it to

:56:11. > :56:14.be effective there needs to be a price differential, will you pass

:56:15. > :56:19.that on to retailers? It is very important. I will not go into our

:56:20. > :56:23.commercial relationships with customers, but the principle which I

:56:24. > :56:26.think you are trying to get to, I understand, I think the principle

:56:27. > :56:31.which you are trying to get to, given how hard I am working to try

:56:32. > :56:38.to reduce sugar in my portfolio it would not be in my interests to try

:56:39. > :56:41.to fight the way the levy is passed. At we want to hear that you will

:56:42. > :56:46.pass that differential onto the retailer. You can't control what the

:56:47. > :56:51.retailers do, but if you spread it across your whole product range as

:56:52. > :56:56.an umbrella increase to observe it into other parts of the product

:56:57. > :57:02.range and subsidise the sugar, that would be unreasonable. That is not

:57:03. > :57:07.our intent. Would it be passed on in full proportion? Genuinely, it is up

:57:08. > :57:11.to the retailer. From the point that you still retain control, would you

:57:12. > :57:19.be passing on... I will look to recover my costs... Broadly in line

:57:20. > :57:26.with how the levy is applied, I will seek to recover it. Broadly in line,

:57:27. > :57:30.or in line? It is very important. I am not seeking to do anything other

:57:31. > :57:33.than exactly what you suggest, to pass it on as it has been

:57:34. > :57:39.recommended by the government. That is what you seek to do? Thanks,

:57:40. > :57:45.James. What is the perception of other panel members in terms of the

:57:46. > :57:48.likelihood that the high sugar drinks will be the ones that

:57:49. > :57:55.experience the price increases in the shops?

:57:56. > :58:03.At the moment my members are trying to understand what projects will be

:58:04. > :58:08.affected and 2018, because as I specified before, it is going ahead

:58:09. > :58:12.and plan to conclude before 2018, so it is hoped that the quantity of

:58:13. > :58:16.products affected by the levy would be the minority. We accept that some

:58:17. > :58:19.would-be cupboard, the retailer would have to decide how they

:58:20. > :58:24.approach that and how that translates in terms of cost.

:58:25. > :58:31.Professor Dobson, what is your thought as to a proportion of the

:58:32. > :58:36.soft rinks industry, how the proportions will change between high

:58:37. > :58:41.sugar and low sugar, do you think there will be a market alternation

:58:42. > :58:48.in consumption between the two? Yes, I think looking at this

:58:49. > :58:54.particular industry, I want to separate out children and young

:58:55. > :58:58.adults market, what they might be substituting between the other soft

:58:59. > :59:06.drinks as opposed to maybe some adults, particularly in a non-retail

:59:07. > :59:11.environments like going out, an opportunity where they might be

:59:12. > :59:15.substituting alcohol. There might be two different effects. It would lead

:59:16. > :59:19.a situation where if the levy was sufficiently high and was passed on

:59:20. > :59:24.and then the retailer was also prepared to pass that on, you would

:59:25. > :59:28.get a premium price for the sugary product. That would be for the

:59:29. > :59:33.industry to decide how they approach that premium priced products, that

:59:34. > :59:36.they would clearly seek to position it as a premium product. So for

:59:37. > :59:40.special occasions when you might need a high level of sugar, I would

:59:41. > :59:45.suggest that that would then appeal more to an adult market. The crucial

:59:46. > :59:50.issue we have discussed today is about childhood obesity. I think

:59:51. > :59:57.that bad, clearly, the effects are likely to be much more about

:59:58. > :00:00.substitution towards reduced sugar products for two reasons, one is the

:00:01. > :00:04.pricing incentive and secondly there is a very strong signal to consumers

:00:05. > :00:11.and the public that the right thing to do is to substitute. So the

:00:12. > :00:15.default does not become a sugary drink, the default becomes a low

:00:16. > :00:20.sugar or reduce sugar drink. That is what we are trying to achieve here,

:00:21. > :00:23.I think. There are issues about speed, Ireland assemble the industry

:00:24. > :00:27.we are talking about major investment and time to adjust. I

:00:28. > :00:30.thought it was an interesting move to design the levy with

:00:31. > :00:36.forward-thinking in mind and allow for that adjustment rather than be

:00:37. > :00:42.automatically introduced. But we want to see that perhaps switch in

:00:43. > :00:46.consumption patterns. I predict we will see just sugar drinks become

:00:47. > :00:50.the minority, they will either be left with energy drinks, where you

:00:51. > :00:54.need to sugar for performing in sports and working out, or as a

:00:55. > :01:03.premium product designed for adults where they have a high sugar

:01:04. > :01:07.content. Do you worry about the emergence of mid-sugar drinks such

:01:08. > :01:13.as Coca-Cola Life, which at 30% lower sugar than standard Coca-Cola

:01:14. > :01:16.but nevertheless are still quite sugary, and the mixed messages that

:01:17. > :01:21.sends out and whether actually there is a risk that sugar intake could

:01:22. > :01:26.increase among some people who are currently drinking the zero sugar

:01:27. > :01:30.alternative? Any improvement is an improvement. I

:01:31. > :01:36.think it is a sizeable improvement. I think that is the critical issue.

:01:37. > :01:41.The message has to, cross, reduce the sugar content. One of the issues

:01:42. > :01:46.we have touched on, let me reinforce, is about portion sizes --

:01:47. > :01:50.the message has to, cross, reduce the sugar content. I am delighted to

:01:51. > :01:55.see new products coming onto the market where they are being

:01:56. > :02:07.repositioned for a reduced norm. The advent of 250 ML pounds as opposed

:02:08. > :02:16.to 330, for example. -- 250 ml cans. If it says that the recommended

:02:17. > :02:23.portion surfing is ml -- two in June 50 ml, they will consume more when

:02:24. > :02:28.the norm is 330 ml. Encouraging drinks to be packaged as 250 ml will

:02:29. > :02:31.be a step in the right direction. I think the industry is making that

:02:32. > :02:37.move, encouragement to move quicker would also be helpful. I come back

:02:38. > :02:41.to the great enormous disparity in units pricing. B make this concrete

:02:42. > :02:50.so we really know what we are talking about. A small bottle of a

:02:51. > :02:55.carbonated drink, working at 25p per 100 ml, compared to a multi-buy

:02:56. > :03:03.after working out at 5.7 p, that is a huge comet huge -- huge, huge

:03:04. > :03:08.incentive to bulk buy, and edit the many consumers adhere to just

:03:09. > :03:15.consuming one or two too rigid and 50 ml portions. As to the mid-sugar

:03:16. > :03:17.drinks, do you think there is the possibility of consumer confusion

:03:18. > :03:23.where those on zero sugar products do not quite appreciate that the

:03:24. > :03:34.mid-sugar brands are full of far more sugar? Coca-Cola Life, if that

:03:35. > :03:41.is your example, it is a tiny proportion of the Coke business,

:03:42. > :03:46.less than 1%. The majority of people who have tried Coke Life had

:03:47. > :03:51.switched from Coke Classic, but it is a tiny part of the business. The

:03:52. > :03:54.focus for me, earning the business, is the best products to help people

:03:55. > :04:00.make lighter choices are the zero sugar and zero calorie versions, so

:04:01. > :04:08.if I take a much bigger part of the portfolio, which is Coke Zero, it

:04:09. > :04:12.has done OK but it never really set the world alight. When we asked

:04:13. > :04:19.consumers why it was not working, why are you not effectively moving

:04:20. > :04:22.from Coke Classic to Zero, 50% of consumers did not realise that the

:04:23. > :04:28.zero men zero sugar. So we relaunched at last year, we have

:04:29. > :04:37.called it Coca-Cola Zero Sugar, sales are 40% up. You think it is a

:04:38. > :04:40.light bulb moment, that is the intent, to try and encourage and

:04:41. > :04:44.nudge consumers into lighter options, that is the intent. It is

:04:45. > :04:50.definitely the intended Coke, I believe it is the intent in the soft

:04:51. > :04:55.rinks industry, therefore, again, back to my earlier point, it is

:04:56. > :04:59.strange to focus in on the one part of the food and drink industry that

:05:00. > :05:04.has been so successful at reducing sugar levels versus any other part

:05:05. > :05:07.of the food and drink industry. You have a follow-up question? Professor

:05:08. > :05:15.Dobson almost made my case for me, it is coming back this in thing you

:05:16. > :05:19.mentioned, Mr Woods, control. Portion It is easier to shrink

:05:20. > :05:22.individual servings and shrink chocolate bars, but when you buy a

:05:23. > :05:28.large bottle it is very hard for people to know how much is 250 ml,

:05:29. > :05:33.if you ask the majority of people hear how much is in my classic glass

:05:34. > :05:41.of water, I think a few of us would get it right. One of the things that

:05:42. > :05:45.came out of the report was that the link needs to be much more simple,

:05:46. > :05:50.on the labelling, spoonfuls of sugar, so it is very visual. That

:05:51. > :05:55.does not help to divide the bottle up. Is there more the industry could

:05:56. > :05:59.do on a voluntary basis, especially lines on the labelling, especially

:06:00. > :06:05.now we are coming away from EU regulations, that would help? I

:06:06. > :06:10.think that 250 ml cancers are very interesting area, we launched those

:06:11. > :06:14.three years ago and we now have 250 ml cans in 12,000 stores up and down

:06:15. > :06:18.the country, distribution is growing. They are becoming more and

:06:19. > :06:24.more available. On the larger sharing bottles it is quite

:06:25. > :06:28.difficult. People do not share, that is the problem. People do share,

:06:29. > :06:33.that is what they do, but you are right, it is quite difficult to

:06:34. > :06:36.judge. We have looked at the idea but not implemented it off-putting

:06:37. > :06:40.portion markers on the side of the bottle, which I think you see

:06:41. > :06:43.answered juices. On the side of all our packs we have just introduced

:06:44. > :06:49.the number of portions which the pack contains, so a label that says

:06:50. > :06:54.on a one litre bottle, this is ball portions. It is not quite where you

:06:55. > :06:59.are going but it is starting to move in that direction. As for labelling

:07:00. > :07:04.in the general sense, the Government has a recommended labelling scheme

:07:05. > :07:09.which is colour-coded GDAs. At Coke B were one of the first companies to

:07:10. > :07:14.adopt that and are still in only around a third of major packaged

:07:15. > :07:20.goods companies which have adopted the Government scheme. The issue is

:07:21. > :07:25.not, could we have a new labelling scheme question it is, can we all

:07:26. > :07:28.use the same one? There is a Government recommended scheme and it

:07:29. > :07:32.should be incumbent on manufacturers and retailers to use that, then

:07:33. > :07:36.there would be a clearer understanding at a level playing

:07:37. > :07:42.field. Does the Government scheme need more teeth if people are not

:07:43. > :07:46.complying with it? I just wish more people... I don't how to make more

:07:47. > :07:50.people comply, I guess that is for you to decide. I know at Coke the

:07:51. > :07:55.decision we made was that consumers found it useful to put that

:07:56. > :08:01.labelling scheme on our packs. So we put that labelling scheme on the

:08:02. > :08:06.packs. It was less about the numbers on the GDA labelling and more about

:08:07. > :08:12.the colour codes, the colour codes are quite intuitive. It is the

:08:13. > :08:16.visual side, isn't it? Moving on to Andrew.

:08:17. > :08:20.Thank you, starting with Professor Dobson, we focused a lot on the soft

:08:21. > :08:29.rinks levy, it is important number Government's aspiration to take 20%

:08:30. > :08:34.of sugar out of breakfast cereals, yoghurt, biscuits, cakes,

:08:35. > :08:40.confectionery, puddings, ice cream and other sweet goods as well. What

:08:41. > :08:41.impact do you expect those measures to have on the food and drink

:08:42. > :08:51.industry? Measures will fail because they are

:08:52. > :08:55.not targeted. They will have the same problems as the responsibility

:08:56. > :09:00.deal relying on one-to-one agreements as opposed to an industry

:09:01. > :09:04.requirement to do it. The reason I think the soft drinks industry levy

:09:05. > :09:12.will work is because it applies to the industry. You either adjust and

:09:13. > :09:18.reformulate or pay a tax. There's a clear incentive on everybody to move

:09:19. > :09:24.in a direction. A vague statement we want to just without identifying

:09:25. > :09:31.where, how you're going to achieve it, that is not clear from what is

:09:32. > :09:35.stated, is clearly not going to be a successful strategy because it does

:09:36. > :09:42.not even tell you where the starting point is of where you are going to

:09:43. > :09:47.go with it. I have grave concerns about almost a broad aim rather than

:09:48. > :09:55.an action by which this was supposed to be about. It needs to be much

:09:56. > :09:58.more categorical on the product categories where they would like to

:09:59. > :10:07.see the reductions at work on it on that basis. Thank you for being so

:10:08. > :10:15.Frank. To be specific, what further teeth would you propose that apply

:10:16. > :10:19.to measures that would result in successful outcomes in achieving

:10:20. > :10:26.this 20% reduction across those nine categories mentioned? There is no

:10:27. > :10:34.stick here. What is the threat if you do not comply? It depends of the

:10:35. > :10:39.targeted nutrient in this case sugar, there should be some implied

:10:40. > :10:46.threat that if you do not reduce by this level by a set period then

:10:47. > :10:51.there would be sugar tax introduced for your particular category. The

:10:52. > :10:55.government has said, it is vague, but said we will use other levers to

:10:56. > :10:59.achieve the same aims if there has not been sufficient progress by

:11:00. > :11:06.2020. Specifically what do you think we need? To make a threat credible

:11:07. > :11:11.you have to sure what the stick is on this. To make vague suggestions

:11:12. > :11:17.that there could be further action is not enough. You give the industry

:11:18. > :11:20.a clear timeline when you would want them to re-formulate and you worked

:11:21. > :11:25.on that basis and see what will happen. I am pressing you on what

:11:26. > :11:36.you think should happen, and other tax? Yes. Why stop at soft drinks,

:11:37. > :11:42.is what you are saying? Yes. In my mind it is not about the tax-raising

:11:43. > :11:46.aspect of what you want, it is about incentive structure that you want.

:11:47. > :11:50.You want to change the incentives in the way the industry formulates its

:11:51. > :11:54.products, the way in which they are sold under way in which consumers

:11:55. > :11:59.buy them. You want all of them to substitute something that is reduced

:12:00. > :12:02.sugar. That is what your ultimate aim is. We have seen the

:12:03. > :12:07.effectiveness of the soft drinks industry levy because we are aware

:12:08. > :12:12.some companies are already be formulating and planning, whether

:12:13. > :12:18.brand manufacturers or own label. We are seeing the effectiveness. It is

:12:19. > :12:24.a very good device if you are clear on it, provide the incentive and say

:12:25. > :12:27.the way to avoid this is to make the changes now or work a structured

:12:28. > :12:32.plan with a clear timeline. It is the lack of a clear timeline and the

:12:33. > :12:38.lack of consequences if you do not work to it that troubles me. You

:12:39. > :12:42.have been admirably clear. Can I ask from a comment from the British

:12:43. > :12:47.Retail Consortium? We are more optimistic. I would not say the plan

:12:48. > :12:51.is going to feel. I think it will have certain success. To get full

:12:52. > :12:57.success certain things need to be introduced. We have called for a

:12:58. > :13:00.level playing field. We understand that this time around more

:13:01. > :13:06.conversations are being had with companies that perhaps have not been

:13:07. > :13:10.engaged before. We strongly believe that the regional ambition, which

:13:11. > :13:14.was to engage with every single company that has 15 plus outlets in

:13:15. > :13:20.the country, should be pursued, and that is the minimum level of

:13:21. > :13:25.engagement we need. To challenge you, the soft drink levy has been

:13:26. > :13:31.really effective already, why not replicated for these other nine food

:13:32. > :13:35.categories? I believe there is a way we can reform. We add in the process

:13:36. > :13:42.of moving towards products that are lower in sugar unlike in the soft

:13:43. > :13:49.drink category is not alternatives in the case of sweeteners or other

:13:50. > :13:52.ingredients are freely available to get products that are lower than

:13:53. > :13:57.sugar. The driver that has been acknowledged to reduce sugar in some

:13:58. > :13:59.of the categories, for example chocolate, it is different

:14:00. > :14:05.approaches being used for different categories. The additional element

:14:06. > :14:09.that we believe is required, having gone through detailed category

:14:10. > :14:14.meetings for over ten categories that have been identified, is a

:14:15. > :14:19.little bit more detail. We feel the approach of having maximum targets

:14:20. > :14:24.in the way we have for assault, as opposed to overall production of 20%

:14:25. > :14:29.per category, we feel these will enable companies to have a bit more

:14:30. > :14:32.guidance as to what a reasonable level for certain types of

:14:33. > :14:41.subcategory would be. What is achievable and reasonable as the

:14:42. > :14:45.quantity of sugar. To finish, to ask each of you how you think this

:14:46. > :14:53.should be evaluated and success measured? It is a really interesting

:14:54. > :14:56.question. There's a number of elements and this is being

:14:57. > :15:00.discussed. The focus at the moment is on the reformulation element.

:15:01. > :15:05.There is some measuring tools that have been discussed that will show

:15:06. > :15:11.how much we are progressing. There is talk about measuring the baseline

:15:12. > :15:14.for each one of the categories and measuring it in a year and that

:15:15. > :15:19.would give is an indication of whether we are progressing in the

:15:20. > :15:24.right direction. There is other aspects such as how we make sure or

:15:25. > :15:27.understand that we are moving in the right direction for portion sizes.

:15:28. > :15:31.It is more difficult to understand what that measure would look like.

:15:32. > :15:39.Talks about volume of sugar but that would not necessarily specified or

:15:40. > :15:45.correlates directly. That element is unclear. We are thinking about what

:15:46. > :15:50.that measurement might be. It has been suggested that sales figures

:15:51. > :16:02.might go a long way in indicating that progress is being achieved. I

:16:03. > :16:05.am not sure a tax is a good way to achieve the goals set out. I am

:16:06. > :16:13.talking about the whole plan. In 2020. It is not about raising

:16:14. > :16:18.revenue. This is about trying to reduce childhood obesity rates. You

:16:19. > :16:22.have to find a way, I do not know what the measure is, but that is the

:16:23. > :16:27.goal. It strikes me that what we have is a very narrow firm policy

:16:28. > :16:33.which is the soft drinks industry levy which is targeting a sector

:16:34. > :16:37.where sugar consumption is the cleaning very fast so I would be

:16:38. > :16:42.surprised if you use childhood abuse AT should end goal of the measures

:16:43. > :16:46.that have been argued so far been make much of a difference. You need

:16:47. > :16:50.measures, the end measure has to be whether we see the curve coming back

:16:51. > :16:54.down, and that was why there had been a call for extending the

:16:55. > :16:58.measurement programme of children, but that will take quite some time,

:16:59. > :17:07.so you need short-term measures. I am not sure what they are four

:17:08. > :17:15.sectors outside of soft drinks. OK. Evaluating the approach, not just

:17:16. > :17:17.one piece of it. My comments are specific to advertising regulation

:17:18. > :17:23.and clearly one of our concerns would be to monitor whatever the

:17:24. > :17:31.consequences of the ban coming in, Ofcom was concerned about other

:17:32. > :17:33.areas where HFSS came to. We need to be vigilant about changes in the

:17:34. > :17:41.market. We need to stay on top of the evidence base. As we always do,

:17:42. > :17:50.we want the success of any measure we take, to try to improve on any

:17:51. > :17:53.kind of ambiguity in the rules. Talking about the extent to which it

:17:54. > :18:00.is clear to advertisers there are clear audience measures they can use

:18:01. > :18:09.to apply the 25% test. It is the concern to remain vigilant.

:18:10. > :18:13.Professor. I reflected that there are aspects that trouble me about

:18:14. > :18:19.the action plan in terms of its lack of direction beyond the soft drinks

:18:20. > :18:27.industry levy. I like to see very clear targets and milestones to

:18:28. > :18:29.achieving those so it is a very clearly understood plan that

:18:30. > :18:35.everybody who is involved in the industries and consumers can see. It

:18:36. > :18:39.is that lack of commitment and direction that troubles me, that we

:18:40. > :18:43.could be here in a few years, nothing is improved, nothing is

:18:44. > :18:47.changed. There has been reformulation of some products but

:18:48. > :18:53.not enough to stop what is an epidemic. Whichever way you look at

:18:54. > :18:57.it, that is what has happened. We know that these children and

:18:58. > :19:03.overweight children are likely to become obese and overweight adults.

:19:04. > :19:07.That imposes huge health costs, has the burden on society and reduces

:19:08. > :19:15.the quality of peoples lifestyles and living. This is the fundamental

:19:16. > :19:19.that we as a nation get this right and we have an opportunity and we

:19:20. > :19:26.have to seize that opportunity. I would like to see more direction on

:19:27. > :19:30.price promotions. They are an issue. Why? Because of temptation.

:19:31. > :19:35.Temptation awaits us all. I suffer from the doughnuts in the petrol

:19:36. > :19:40.station. I suffer from temptation all the time. I am always reminded

:19:41. > :19:45.that the success of many industries and companies relies on

:19:46. > :19:49.availability. Coca-Cola has been enormously successful. Amazingly

:19:50. > :19:54.successful company, because of trying to keep products within arms

:19:55. > :20:00.reach, accessible, and that is the same for many food and drinks

:20:01. > :20:06.companies. The one thing that is not even mentioned in the policy as far

:20:07. > :20:10.as I can see is about food, drinks and nutrients in and physical

:20:11. > :20:13.activity, is the thing that is in this container in front of us, tap

:20:14. > :20:22.water. Not bottled water necessarily. Almost free. If we

:20:23. > :20:26.encourage parents and children to drink more, make sure we put it

:20:27. > :20:32.within arms reach for them, what a difference it would make. For

:20:33. > :20:36.example, why is it you cannot go to a fast-food restaurant and be served

:20:37. > :20:43.tap water? You have to order a value meal, and burger, fries and a

:20:44. > :20:46.carbonated drink. Why are they not giving you tap water and taking off

:20:47. > :20:53.the price of the carbonated drink in the value deal? You are being

:20:54. > :20:57.encouraged. Why is there not a water fountain available there so that

:20:58. > :21:02.rather than have a freebie fill of a sugary drink you can have free

:21:03. > :21:06.water? There are other environments. Make it a policy that for children

:21:07. > :21:12.everywhere and schools everywhere, there is freely available tap water

:21:13. > :21:16.available to them. Get that message over to parents of that when they

:21:17. > :21:24.sit down in the evenings ready for dinner they are serving water, not

:21:25. > :21:30.another drink. We are doing our bit. We are. I reflected on that. I am

:21:31. > :21:42.conscious of the time. One final question. I imagine you will be

:21:43. > :21:46.aware of the Channel 4 dispatches programme that was on our screens

:21:47. > :21:53.just over a three months ago, the secret plan to save that Britain.

:21:54. > :21:59.The original draft obesity strategy. I thoroughly recommend the

:22:00. > :22:04.programme. It should want the government originally intended to

:22:05. > :22:06.present in their strategy. Many things in the draft unfortunately

:22:07. > :22:12.did not make it to the final strategy. In the draft plan there

:22:13. > :22:18.was a sentence which said that we must recognise increasing amount of

:22:19. > :22:22.exercise children undertake will not in itself solve childhood obesity,

:22:23. > :22:26.the number of calories you burn through physical activity is dwarfed

:22:27. > :22:34.by the amount we can easily consume through what we eat and drink. Would

:22:35. > :22:44.you agree? That exercise on its own will fix obesity? No. That what you

:22:45. > :22:49.burn through physical it ever day is dwarfed by the amount you need to

:22:50. > :22:58.drink. That is why we are getting bigger, we consume more calories

:22:59. > :23:02.than we burn. That seems clear. We have few before us as one of the

:23:03. > :23:06.companies, of which there are many, who do your bit in the field of

:23:07. > :23:12.tackling obesity. Perhaps you can share with us why it is that you the

:23:13. > :23:14.company spent so much of your income on physical activity programmes? On

:23:15. > :23:20.your website it is over ?6 million. Subtitles will resume on 'This Week

:23:21. > :23:31.In Parliament' at 2300.