10/02/2017 Select Committees

Good afternoon. Thank you for coming to this afternoon's follow-up

session on the Government's childhood obesity plan and thank

you, too, to all of you for agreeing to reschedule this afternoon's

session. Can you all hear me? Sorry you were

indicating you couldn't hear me? Is there anything we can do about the

sound levels? There is no amplification. So we are

all going to have to project a bit more. Can you hear me all right now,

Sir? Joonchts yes, ma'am. Right. So, before we get started,

can I please ask each of the panel to introduce themselves to those

following from outside the world, stating with yourself Paul Dobson

son I am Professor of business Strategy and public policy and also

head of Norwich Business School at the University of East Anglia. I'm

dre director of the committee's of advertising practice. They are the

committees that right the UK advertising codes.

Thank you. Good afternoon, I'm John skad Woods, the general manager of

Coca-Cola Great Britain and Ireland. I'm the deputy director for Food and

Sustainability at the British Retail Consortium, the trade organisation

representing the retail industry. Thank you to all of you for coming.

We open the questioning. I'm wearing two hats, a Chair of

this committee but also on the all-party group on adult and

childhood obesity. In November 2015, this committee

published their report calling for bold and brave action, do you think

the Government's childhood obesity plan fulfils that call? We start

with Professor Dobson? Thank you very much for the question. No, I

don't think it goes far enough. I think there is one decisive measure,

and it is very clear will you the soft drinks industry levy. I think

there are other measures which wouldn't to provide incentives which

would hopefully reduce consumption food and encourage children to

undertake more physical activity but for myself I would've wanted firmer

objectives, with clearly defined milestones and bench marks. I

would've wanted to see some positive actions actions particularly around

the retail environment, which would help consumers adjust their

consumption and purchasing patterns and I'm sure there are other

activities as well but my main interest is really around the retail

environment and I would've liked to have seen some firmer policy

measures in that context. From my perspective, the plan

contains a range of measures intended to tackle obese yant we're

supportive of that. In terms of my professional expertise, the plan

looks forward to the work that would be undertaken in temples

non-broadcast advertising of food and soft drinks high and fat, salty

for children and since the plan was published, we have now introduced a

been on such products in a number non-broadcast advertising.

I thank you for the opportunity to be here. I talked on the committee's

work gave, was well-thought through, considered and measured on a

complicated, complex issue. There was a lot of things in the scald

bopd and brave report. Some of which I agreed with and some of which I

didn't agree with but I was surprised then when the obesity

strategy Kim came out, the only concrete measure was the soft drinks

industry levy, which in itself I don't think is going to make any

meaningful impact on obesity rates for either children or adults. From

our side I was interested to see that for the first time, the

strategy uses the balance of regulation verses volume tri. With

the regulatory measures on the levy, however we were a little bit

dispointed that that of level of regulation was not expanded to areas

of product improvement as we had been calling for. We are a little

bit concerned that the plan does not specify how we are going to achieve

the level playing field which we believe is so important.

Thank you. I'm an ex-retailer, I spent 18 years

in retail, so this next section is very important to me, really. I know

all the secret ways to get people to spend more. My first question really

is to Professor Dobson - does your work on the impact of retail pricing

on overeating support our recommendation for action on price

promotion and the promotion of food within a retail environment? Yes. It

does. Let me explain what I think is the crucial issue - we have to think

of the general public as both shoppers and consumers. The two

things are not exactly identical. Because what people buy is not

necessarily what they eat. They could be buying products for other

people in the household to eat but, also, storing products that they may

consume at some later point or core share but the key point about

overeating starts really with overpurchasing because with wns

you've bought the product, then the greater likelihood is you are

actually going to consume it. This is where price something really

quite vital because of all the instruments of marketing, it is

actually pricing that drives the most around what West End up

purchasing. So, the pricing inp sentives you put into the market and

the way that you steer con-- pricing incentive you put into the market

and the way you steer consumers to goods matters. So my work focuses on

a quite a lot on quantity discounts. They could take various forms, in

the form of multi-buys, where you, for example, buy three for the price

of two. But they could be quantity discounts just on a very large

container. You get a cheaper unit price than on a smaller one. That

clearly steers consumers towards buying large amounts. Once they

purchase the large amounts, then there is a likelihood they are going

to consume those large amounts. So there is plenty of evidence that

suggests that portion sizes and the way that consumers view them as the

norm dictate how much they eat and we know that over time, what are

perceived as the form has increased and, therefore, portion sizes, in

particular, seem to be a major driver in encouraging overeating,

along with snacking. Just on that point about portion sizes. Obviously

in the news recently, about a certain chocolate brand making their

chocolate bars forward do you think this is a good way forward? Yes.

There are two aspect to this, one is whether firms do it in a sneaky

fashion so, they don't actually tell you what goes on in the form of

shrinkflation, so you reduce the quantity but don't inform the

public, so they don't know until after they published it. There is an

alternative, you could signal a size reduction and use it as marketing

and say - we are doing this, because we want to reduce the number of

calories that are perceived in a portion. So there is potentially two

benefits that could arise. Thank you. Carrying on with this question,

are there any regulatory actions which could be taken or do you think

it is too difficult to find a way to curb price promotion? If I come back

to the quantity discount dilemma, we see it in every retail environment.

I don't just mean when you go into a supermarket and purchase. When you

go into a fast-food outlet, you are face with the same issue, for a few

pence more, you can get a bhoel lot more food and drink so. This issue

of inconsistent unit prices prevads retail environments. You could

regulate to ask that they set a common unit price, regardless of the

size. That would be quite a drastic measure to do that. But there are -

the ways that you could seek to control particular extreme cases, so

e for example n France my understanding is they've recently

banned free refills of drinks. That would be a measure. You may think

that buying buy one get one free offers would solve the same problem

but they could charge you an extra penny for the extra amount. So that

doesn't resolve around it, there are ways to work around it. I think that

adds a critical issue, you need to think through what the ramifications

of any measure would be. You certainly don't want to have effects

which could be dely tierous because you have not reasoned through how

the venders would respond to the measureses.

Does the rest of the panel want to add anything? No? If the government

right to claim that a lot of forward-thinking businesses are

already making changes? You have mentioned a couple. There are a

number of instances where some companies have recognised that there

is a direction towards encouragement towards sugar production for example

all they are trying to reformulate their products, sizes accordingly,

signalling a benefit. Any voluntary agreement, the problem is that

companies first and foremost, profit motivated, will focus on revenue and

profits. They will only go so far as it suits their bottom line. Clearly

they have to think of what competitors will do if they

co-ordinated move together that might not be quite a disadvantage to

reducing size but if you left it to an individual firm they might be

reluctant to do it until other firms follow suit and this is where

government policy can act as a co-ordinator, overcoming natural

competition through lack of coordination because you are

requiring the industry to move in that way. This is what is

interesting about the soft drinks levy. It applies to the industry

together so they will all have to respond than take account of that

measure. Leading the way for years in the way of nutrition values, in

terms of whether changes have been introduced in areas like marketing

and promotions our members have been trying hard to move away from

certain type of marketing and promotion that customers do not one

announcements have been made by a number of our members in the press,

moving away from buy one get one free. There has been progress. Some

of those shows in the figures. When the committee met last the evidence

from Public Health England had just been published and 40% of food was

being sold on promotion and the latest figures show a deep case in

-- a fall down to 27%. There has been a move away from promotions and

certain types of promotions. There has been changed taken by individual

companies. Do you have any evidence that the government's action will

accelerate a shifting market? For the purpose of achieving that level

playing field and getting everybody to the same, there needs to be

intervention. Last couple of questions. To the same panel

members. What more could or should the retail industry be doing to

reduce the impact on purchase of unhealthy food? Turning it on its

head, what more could be done to make sure that people promote

healthy food options? Do you want to go first? One of the issues is about

these quantity discounts. You have to ask yourself why it is mostly

unhealthy foods you get this. This is because of the nature of the

dilemma in the consumer's mind. They want to have a bargain so tempted to

go large but the angel on their shoulder is suggesting that they

restrain from how much they purchase and consume. It is because of that

tension that you get these incredibly different unit prices.

One example, if you went to a very well-known large retailer today and

purchased a very well-known carbonated drinks brand you would

see a fourfold difference in the unit price between a small size and

a large size or multi-buy. That kind of incentive, even on an unhealthy

product, is going to drive bargain hunters to purchase that, the

extremity of that. Or unhealthy foods you do not tend to see that,

one reason is the products are often perishable. We all about their

products of not consuming fresh fruit and vegetables quickly, they

will perish and end up being thrown away. That limits them to some

extent but equally there is not this kind of tension in somebody's mind

about the difference between wanting a bargain but knowing that actually

it could be harmful. You will always get this problem with unhealthy

products. There will be this tension. There is a further aspect

unhealthy products and that is that they tend to have expandable demand.

That is where you see those products which have the largest proportion of

sales driven by promotions on price because they are expandable and

consumers will grab bargains. Price promotions lies at the heart of this

problem in the retail environment. Do you have anything to add? Every

single retailer has an internal policy that would make them balance

the quantity of products, if you want to describe them as high fat,

sugar and salt, and every retailer has a commitment to promote

healthier moderates. That was incredibly obvious over Christmas

when there was a price war over the vegetables that were to be used in

the Christmas dinner. It was one of the first time where there was a

real place war over carrots for example and that was certainly well

received by customers. The percentage of customers at the

acceptability of what customers want to see has changed and with that the

manner and type of products being promoted and how they are being

promoted by the majority of members are looking at different ways of

positively promoting and providing information on healthier products.

We have heard a lot in the press and media focusing on products displayed

at the checkout. I saw a study that says that we collectively purchase a

third of our sugar and saturated fat as a result of the products we see

on end of while promotions. Would you call that? -- agony. Should

there be a different area to focus on? Interesting question. Part of

the importance of place within the retail environment and what we see.

End of isles, they are noticeable and we have to navigate around them

and they draw our attention and that lends itself to the possibility of

impulse purchases. Up to 40% of what consumers buy is an impulse

purchase. That means that when they go into a supermarket we typically

have a mental shopping list or maybe a written shopping list but in

addition to that we will make purchases on the spur of the moment

depending on what we see. Those signals of them come with bright

yellow, orange and red signs grabbing our visual attention but

there is often framing, that when we see 50% off, 40% off, it attracts as

as a potential bargain because of that framing and we end up putting

those products in our shopping baskets as a result. I have

understood cases that I have looked at as part of my analysis that there

has been a 30 fold increase because of products being put on the end of

isles. The volume increase could be massive on these displays and could

be particularly successful if placed in a position very well. Did you

have a follow-up question? I did and I have some questions on

advertising. I have one as well. Could you go further? You have

touched on a couple of things in what you feel the government, what

further action you would like to see in terms of creating a level playing

field. The level playing field aspect is important whenever you

look at agreements with the industry. If I am honest one of the

problems with the responsibility deal is it was bilateral, agreed

between... As part of the deal, with the manufacturer or individual

retailer what would happen. To be honest, the incentive to come

forward with such an offer to reduce the amount of sugar in your products

or price it in a particular way is only going to come about if it is in

your individual interest to do that. There is this collective problem.

Anything which helps coordinate, I will qualify this, action which

leads to a benefit, whether it be re-formulation or changing in the

pricing structure, is to be welcomed. The caveat is you do not

want to coordinate in the wrong direction. For example if you

imposed a tax on ingredients like sugar so all sugar products become

higher price than the worry would be Edward coordinate prices on

non-sugar products. You get an umbrella pricing problem. You raise

the prices of some products and that reframes the prices of others which

softens competition to raise them. You have to think through what

coordination effects are. You want them to be beneficial and not work

against you. In terms of things like price promotions and activities,

there are ways to do that to encourage. My big issue is the

volume of what we purchase. I believe consuming all goods and

moderation cannot be that harmful, it is consuming in excess, so we

have to work on aspects. There has been a movement of some retailers

moving away from multi-buys, but if that is replaced with one-off

discounts on large volumes it is not going to be helpful either. It is

around coordination to get the ideal benefits. Is there anything you

would like to add? I have a short follow-up on this issue. It is to do

with the nontraditional outlets where you might go into a garage to

buy petrol but to come out with a bag of doughnuts because it is

placed at the counter. I wonder what assessment has been done about the

extent to which those impulse buys not in the supermarkets can have a

detrimental effect and what of anything you believe should be done

to tackle something like that? Yes. I have been guilty of this myself, I

confess. Expertise does not stop you being tempted. I have not seen a

particular study. I am aware of different retail environments where

there is an incentive to make an add-on sale so you comment by one

thing like a newspaper and you are giving a deal on buying a bar of

chocolate and it is the same with doughnuts on top of petrol. All

retailers are trying to create sales if they enhance profits or generate

repeat business. That is one of the other benefits promotions,

encourages loyalty. There are aspects around that. It is worrying

yet again we see an example of an expandable demand product, in this

case doughnuts, where if temptation will allow us to make that purchase,

where if it was a healthy purchase we might not choose to the same

extent. We are caught in an environment where we are directed to

a product we were not miss a thoroughly expecting to be that,

there may not be an alternative healthy option, so we are steered to

making that purchase. It applies in that unconventional shopping

environment for food as much to a shopping environment in a

supermarket. You could equally make similar

cases, for example, in fast-food outlets where you might go in for

one products but are tempted by the value deal that is on offer for the

entire meal. As a bundle deal. It is exactly the same problem, they are

encouraging you to add on an extra purchase.

Moving to advertising, if I could just ask you a couple of quick

questions. Public Health England made a whole range of

recommendations about changes to advertising with respect to high

sugar and fat products, salt products. I know you have announced

some new initiative back in December, I think it was, could you

just explain to me what was recommended by Public Health England

that you have not taken account of in the announcement that she made in

December? -- that you made? I am not sure we

have done an evaluation with what we came out with contends of everything

that Ph.D. Said, we took their review into account and we look at

the evidence of advertising on children's food preferences. In

general terms we have a legal obligation to try to balance

commercial free speech with restrictions that are necessary,

particularly pertinent, of course, in terms of our democratic society

because advertising helps to pay for some of the things that we enjoy. We

did an evidence -based review, taking into account the PHE's

concerns, we concluded that whilst the evidence of advertising's impact

on children's food preferences has not changed, context certainly has

the context in which we view the evidence certainly has, most

significantly in nonbroadcast advertising where we have seen the

role of the Internet in children's lives. Today children spend more

time online than watching television. TV is still holding up,

they are still watching it but they are adding to that their viewership

of online material as well. That has fundamentally changed. Whilst, as I

say, the evidence shows a modest effect on children's viewing

practices and simmering towards their diet, there is no digestion of

a direct link with obesity itself. Unless we thought because of the

changing circumstances it was appropriate to announce in December

from July this year we will be introducing a ban on certain product

adverts in all children's nonbroadcast media, which brings

that into line with the TB restrictions that have been placed

for the last ten years. -- with the TV restrictions. One suggestion in

the past has been that you extend a ban on advertising of high sugar,

salt and fat products. Up to the 90 watershed. That is to take account

of the programmes that children might be watching, but lots of

adults might be watching as well -- up to the 9pm watershed. Is that

something you will consider, because you have not taken that step today?

The consultation was from the nonbroadcast body. In terms of our

general approach to this, we have a genuine concern to put the

protection of children first, but that has to be mindful of avoiding

inefficient, unwarranted or perhaps even counter-productive restrictions

in terms of advertising. Between 2004 and 2007, Ofcom undertook the

most there are exploration of this type of advertising and it concluded

that it was merited to place a ban within children's programmes and

programmes of particular appeal to children. It considered that further

restrictions were not warranted because of two things, first of all

that the public health benefits were uncertain and the cost of extra

regulations were, in the view of Ofcom, too great. For example, a 9pm

restriction, off, calculated that would lead to a loss of broadcast

revenue to the tuna ?211 million net, which clearly has consequences

for UK original programming, including children's programming.,

was concerned about the blunt instrument of nine watershed. Off,

lets many channels which have a negligible child audience and it

would seem unwarranted to impose restrictions on them. To the

broadcast committee of advertising practice has not seen evidence in

order to convince itself that it should challenge the conclusion that

Ofcom came to. But they are open to new evidence. Basically you are

saying that the broadcaster's bottom line is more important than

children's waistlines? Absolutely not, we are saying that we have a

legal obligation to balance the protection of children together with

commercial freedom of speech. What we can do is put in place

disproportionate and unjustified regulation. Ofcom's concern was to

reduce children's exposure to this type of appetising, and it feels

that the measures were proportional to do so. -- this type of

advertising. To go beyond these measures, it was felt that the

public health benefits would be too uncertain from that and the loss of

revenue to broadcasters would be too great. The public health benefits on

that, Ofcom found through its research that there was only a

modest direct influence on children's food preferences arising

out of television advertising, therefore if one was to eliminate

all of this appetising from the schedule, one would only be

eliminating a modest direct influence on their preferences, so

clearly that was unwarranted to have such a level of restriction, which

is why it concluded overall that a restriction on children's

programming was appropriate. Just to ask you about the

restrictions which you have announced nonbroadcast advertising,

in the cinema and online, as I understand it, a threshold applies

with regard to the proportion of the audience which is children. Can you

just explain exactly how that would work, and whether you have any

intentions to go further in that regard? The proportion we propose is

25% rule, what we do is we reverse the burden of proof, we invite get

the tasered to prove to the ASA that it is scheduling or placing this

appetising appropriately and it can use various measures to relate to

the ASA what it believes the audience composition of that

particular mediators. In most cases it is quite clear where media is

director just to a child audience or to a predominantly adult audience.

In borderline cases the ASA requires advertisers to substantiate what the

audience profile of that is, and where over 25% of the audience is

aged under 16, they cannot place adverts for these products in the

media. How will this be enforced online? It

is already in force. We have had the 25% rule in place for some time, the

ASA has been regulating online advertising for nigh on 20 years

now, and since 2011 it as regulated online advertising in non-pay for

space on social media and apps, for example. The 25% rule also applies

to gambling and alcohol products, they cannot be shown where more than

25% of the audience are aged 18 or younger. It has already been

applied. Advertisers understand that when the contract with media they

had to know the ordinance profile of that media. -- the audience profile.

In the case of inappropriately placed advertising we would ask the

advertiser to substantiate the audience profile.

It is a very high bar, 25%, that is quite some demand to bring the bar

down from 25%? It is a very high threshold? For children, 25% of the

audience being under 16, do you feel there was a case... Did you look at

bringing back down? We did not get a lot of pushback in consultation for

lowering the bar, 25% is a figure known to advertisers and seem to

work. Looking at it through the other end of the telescope, what

that would do would be to ban this sort of advertising in media where

up to 75% of the audience were adults. I think it is felt that

extending back to 80, 90% or higher of adults would be disproportionate

given the added an -- evidence of the impact of advertising on

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

Kingdom on advertising, particularly advertising these kinds of products?

Do you have any sense? I am afraid I don't know. You don't know that

figure. I know it is a considerable sum, we had it when we did being

Majri the first time, so I can't member, but you are suggesting that

advertising did not work and we should not be worried about

advertising high fat and sugary foods to children because

advertising does not really influence them. As someone involved

in advertising, I am sure you are really not trying to send out the

message that advertising does not work? I am involved in the

regulation of appetising, and both are legal duties and responsibility

is to prevent advertising that lead to misleading, harmful or offensive

information. We are concerned about the potential harm that might arise

from the advertising of these sorts of products and what could be

responsible measures to mitigate that harm. The evidence of

appetising's impact suggests there is a modest direct influence on

children's food preferences and some link with children's diets. The

evidence is out as to what that contributes to obesity. We are not

saying it does not have effect, quite the opposite, albeit a modest

one, together with stubbornly high rates of child obesity that we have

in this country, we need to form a restriction which includes both

restrictions on the placement and scheduling of adverts and on the

contact -- content of adverts. Rule still prevent children from seeing

adverts in other media, but where they do see those adverts we have

rules in place ensuring they do not encourage and in healthy lifestyle

in children or invite them to pester their children about products etc.

-- they do not encourage and unhealthy lifestyle in children or

invite them to pester their parents about products etc. We think this

appropriately mitigate the potential harm that can arise. Do you think

the balance is right, parents do not get pestered to buy whatever, not to

name any products? How does a regulated know they have the balance

right? Spend some time in the supermarket listening to children

nagging their parents, can I have this, can I have that? Where did

they get the name of that cereal, drink, chocolate bar if they have

not seen the appetising? We do not regulate retail in-store. At the

child comes into the store knowing the name of what they want, so to

suggest that advertising is not having an effect on the children

nagging the parent. As somebody who has struggled with her weight since

mid-teens I would not think there was some charming adults having a

little bit less high-fat and sugar advertising put into their nose,

either. -- I would not think there was some harm in adults having. Were

concerned that any advertising... Sorry, any regulation should not

have unwarranted intrusion into adult viewing time. That would be

our concern as well in terms of non-broadcast. How does it inhibits

the pleasure of viewing the programme to have maybe fractionally

fewer HFSS adverts? We don't advertise cigarettes or drink, we

try to tackle something that is now a public health issue. Lots of

adults just fast forward through the adverts. Going back to our legal

responsibility, there is a writer for commercial free speech and for

people to receive information about products that might be of interest

to them. That is, of course, important in terms of adults

receiving such information. So you think the adverts work on adults but

it does not have a big impact on children? I think the adverts do

work, both on children and adults, but we are talking about effect in

terms of food preferences. The concern here is more about obesity

and there are clearly more primary factors involved in the causes

underlying obesity, parenting, schools policy, public understanding

of nutrition etc. Public Health England put advertising and

promotion as the top two when they give evidence to us, they say the

evidence showed... Higher than the sugar levy, number four, I think,

was advertising and promotion, both of which are not really much in the

new strategy. I can't speak for the new strategy but I can say we think

advertising has a role to play, we think advertising regulation is

playing its role in putting in a very strict balance, some of the

toughest in the world, in terms of appetising for HFSS products to

children and broadcast and non-broadcast, so from July this

year, all media directed to children will not be able to... At some

countries don't have anything like this before the 9pm watershed. So we

can't be the strictest in the world, if there are countries that do not

advertise on television before 9pm? We are among the strictest in the

world and that is the language of the strategy. You had a follow-up.

Do you accept or does the adverse died in standard laboratory except

that while in proportion terms fewer children might be exposed to adverts

of foods high in fat, sugar and salt on both broadcast and nonbroadcast

in absolute terms there are plenty of examples, larger numbers of

children would be exposed to these adverts? That is clearly the case.

Ofcom's prerogative and ours was was to introduce rules that

significantly reduce children's exposure to advertising. Clearly by

banning HFSS ads we are reducing exposure. Media which is popular and

attracts a large childhood audience, delivering a handful of adds to

them, our view is that the measures we have putting place have

significantly reduced children's exposure. I do not know if it is

because of the non-fragmentation of broadcast media we have precise

figures on what would be the reduction in children's exposure to

nonbroadcast HFSS adverts. Will there be times when children still

see adverts? Yes. Content restrictions are in place. For under

12 is, any HFSS adverts cannot include promotions or celebrities

popular with children. I was watching Saturday night television

the other week and I counted seven adverts that are high in fat sugar

and salt in one segment of advertising on The Voice. I know

from audience figures that the threshold... It is below the

threshold, it is the proportion, but total numbers are thousands of

thousands of children exposed to these adverts. What is your view on

the impact? I would probably go back to Ofcom's consultation and its view

was that restrictions beyond those that are proposed around children's

programming were not merited on the basis that public health was

uncertain from restrictions and the lot of broadcasters was too great

including the loss in terms of reduction in UK originated

programming including children's programming. I imagine the committee

are passionate about programming in the regions and what might happen to

our advertising sector but we are equally if not more concerned about

the burden the NHS had to contend with as a result of that advertising

and wonder what the view is of how we reconcile both two contrasting

and conflicting differences. I have been speaking for a long time. Our

concern would be that if the evidence suggested that advertising

had a greater effect on children's food preferences and the evidence

seems to suggest I think I have much greater sympathy with that view.

Evidence suggests that it has a modest impact on children's food

preferences, some length with children's diet but the evidence

falls short of establishing a link with obesity. The calculation that

seeing adverts equals obesity is not proven. Multiple and complex

factors, schools policy, parental, public understanding of the

division, perhaps more in the dock and advertising. Does anyone else

want to respond? I would not put the benefits of advertising above the

health of our children. That is the last thing I'd want to do. We have

tried advertising control, a global standard, the UK's tight advertising

market. We are compliant with all of the gods and practices that exist

and have been very supportive of the latest change particularly trying to

bring that cold in line with the broadcast code is important. It is

difficult to understand exactly how you prevent it happening online. It

is a much more difficult environment. I do not have an answer

how to make it better online. It think it is better on broadcast TV,

much tighter ability to regulate, but if you look at where children

are consuming media, it is increasingly online so it is

important we have brought the codes together. As a company we would go a

step further, the vast majority of her marketing money goes behind zero

sugar and zero calorie variants to try to encourage it. I am conscious

of the issue around high fat, sugar and salt and we have deliberately

changed the way in which we do our marketing to try to support zero

sugar variants much more to encourage people to make some

lighter choices of that is what they want to do. To conclude, does that

than you have mentioned that is going to be introduced on all

nonbroadcast media extent to games and apps connected to foods that are

high in fat, sugar and salt? Very much so. Anything tied to a

childhood audience. Does that mean the food companies themselves cannot

sponsor those games? Correct. The soft drinks industry levy is perhaps

the eye-catching element of the childhood obesity plan published by

the government. Something that we as a committee supported, albeit in a

different form. What would you say is likely to be the impact of the

levy on the soft drinks industry? I know that it was part of the

committee's report and it became the only hard and fast action that I can

see in the charter strategy as it came out. I do not think it is an

effective measure on its own for tackling obesity rates of childhood

obesity rates. If you look at the soft drinks industry over the last

decade and the shape of their soft drinks industry and how it has

changed, it is remarkable. If you turn back the clock ten years we

were selling three regular sugared soft drinks for everyone zero sugar

or diet drink and today it is 1-1. That is a massive shift in the

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

a decade ago. Yet obesity rates are up. It is hard to draw a causal link

solely between soft drinks consumption and obesity rates. The

levy itself is designed to encourage reformulation. The report in the

area of obesity I have felt most affinity with this the Mackenzie

Institute report and it said there were two primary things

manufacturers could do, one was reformulate products and the other

was portion sizes which poll has referred to. On reformulation the

soft drinks industry has been on a very rapid process of re-formulating

products without a levy. We are competing ultimately in the

marketplace to provide drinks that people want to buy and increasingly

people want to buy lower sugar low calorie drinks so we are competing

and the market is encouraging us to change recipes and reduce sugar

content and I am sure that will continue. As a company I do not

think it is going to persuade me to do something I was not planning to

do something already because we were planning to be the formulating

products, changing recipes, and indeed since I started we have

reformulated 28 of our leading drinks, it reducing sugar and

calories, and 50% of what we sell is zero calorie. Reformulation is being

done already. Portion control of the other big thing. From the Mackenzie

work it seemed top of manufacturers. It will have less impact on portion

control. Man on reformulation. Could I extend the question in terms of

the British Retail Consortium's stance? We did not express a very

strong view either way when the levy was suggested. We have accepted it

and never really expressed disappointment of support, we

accepted the measure was coming in and our response to the consultation

focused on the practical implications, definitions, scope and

so on. I agree with everything John has said, both drinks has been one

of the categories in which most work has been done in terms of sugar

production. A number of the members are working or have stepped up the

reformulation approach to soft drinks ahead of the levy in 2018. If

you could also give your views with regard to impact on the industry but

also on public health. Thank you for asking me the question. It is

something I have reflected on and done research on. I come back to two

points. I raised one when I was talking about umbrella. If you set

the levy to Lord then you the price of sugared drinks but not so high

that it may deter people buying and equally you make to provide

incentives for non-sugar reduced sugared drinks to sit under that

umbrella of the higher price. You could end up raising all prices

which is not the desired effect. The desired effect is maths

substitution, to get consumers to move from buying sugared products to

zero sugar products. Pricing incentives have to be right. Be

clear. I do not want to punish the industry by arguing for a high levy,

I just want to make sure that they actually do formulations and

consumers shift to those re-formulations. The secondary

aspect, the higher you make the levy, the more difficult it is to

give a really generous bargain discount on larger quantities

because those large quantities of also got to carry the levy into them

as well. I see a double benefit of the high levy. Firstly you raise

prices in such a way that it steers consumers to buying the reformulated

products. Secondly it reduces the generosity of the quantity discounts

simply by virtue of those larger quantities having to pass on the

levy you are raising. What is your view in terms of the way it has been

designed and tiered? There are two alternatives. One is to introduce

the levy on the manufacturers and importers which is the route that

has been proposed and chosen. Secondly you could introduce it

through a value-added tax at retail level. I have argued that the

appropriate level is so directed towards manufacturers and treated

almost as an excise duty like alcohol. Because of this problem

that when it comes to retail pricing the retailer will steer consumers

towards taking very large volumes of drinks and if you are only doing

that percentage basis on that you are not achieving what you want to

do, in fact you might encourage more consumption. I can see a perverse

effect of that was applied at retail level. I am well aware that there is

no guarantee necessarily that retailers will pass on the levy in

the percentage amount that is expected, they could pass on more or

less. If you set the level high enough, one way or another they have

to pass it on. They cannot cross subsidise with other products, that

would be a risk I would be concerned about. What do you think the level

needs to be said that is? The Office for Budget Responsibility has

estimated that it might equate to 18p per litre or 24p per litre

depending on the concentration of sugar.

I think that is the minimum. If you really wanted to be effective, those

are what we want in encouraging reformulation and encouraging

substitute products, I would look at a double. That would make a very

profound effect and act as a really clear signal to everybody, that is

the general public, consumers making purchases, as well as the industry.

I know it sounds drastic and hard hitting the industry, but as I think

we have already heard from John, for the industry, they are moving in the

direction anyway of reducing sugar in drinks. If you structure it

right, all it will do is accelerate that reformulation and move towards

less sugar consumption. I know you doubt the effectiveness

of this whole idea in any case, but what level do you think the lobby

would have to be set out to have an impact of some kind? I don't know, I

think it is a hypothetical question. I am not sure I am particularly well

placed to guess what level you are looking for. I would say it is a

pretty hefty levy exactly as it is. On a sector of our food consumption

and drink consumption where sugar is collapsing as a percentage, down 44%

in the last decade. And by every measure, manufacturers like Koepka

are doing the right thing and taking things out of their products. --

manufacturers like Coke. The total sugar consumption is not declining

at the rate that it is from soft drinks. So it seems strange to me

that a ban on what is already an extensive levy by international

standards on the one part of the food and drink industry where sugar

has really fallen fast. Assuming the levy goes ahead next

year, what encouragement can you give that the associated cost will

actually be passed on those consuming the high sugar drinks in

particular, as opposed to other drinks within your brand? I can't

make many specific references to retail pricing -- I can't make any.

Prices in stores are at the discretion of the retailer, not

bound by manufacturers. I would observe that it is a very

significant additional cost to my business. I am in business and need

to recover my costs. So between that and the other costs we are having

added to our business over the next year also, I will seek to make sure

those costs get covered. Sorry, can I just clarify, we have

heard about it being an umbrella costs spread over your entire

product range, we have heard very clear evidence that it... For it to

be effective there needs to be a price differential, will you pass

that on to retailers? It is very important. I will not go into our

commercial relationships with customers, but the principle which I

think you are trying to get to, I understand, I think the principle

which you are trying to get to, given how hard I am working to try

to reduce sugar in my portfolio it would not be in my interests to try

to fight the way the levy is passed. At we want to hear that you will

pass that differential onto the retailer. You can't control what the

retailers do, but if you spread it across your whole product range as

an umbrella increase to observe it into other parts of the product

range and subsidise the sugar, that would be unreasonable. That is not

our intent. Would it be passed on in full proportion? Genuinely, it is up

to the retailer. From the point that you still retain control, would you

be passing on... I will look to recover my costs... Broadly in line

with how the levy is applied, I will seek to recover it. Broadly in line,

or in line? It is very important. I am not seeking to do anything other

than exactly what you suggest, to pass it on as it has been

recommended by the government. That is what you seek to do? Thanks,

James. What is the perception of other panel members in terms of the

likelihood that the high sugar drinks will be the ones that

experience the price increases in the shops?

At the moment my members are trying to understand what projects will be

affected and 2018, because as I specified before, it is going ahead

and plan to conclude before 2018, so it is hoped that the quantity of

products affected by the levy would be the minority. We accept that some

would-be cupboard, the retailer would have to decide how they

approach that and how that translates in terms of cost.

Professor Dobson, what is your thought as to a proportion of the

soft rinks industry, how the proportions will change between high

sugar and low sugar, do you think there will be a market alternation

in consumption between the two? Yes, I think looking at this

particular industry, I want to separate out children and young

adults market, what they might be substituting between the other soft

drinks as opposed to maybe some adults, particularly in a non-retail

environments like going out, an opportunity where they might be

substituting alcohol. There might be two different effects. It would lead

a situation where if the levy was sufficiently high and was passed on

and then the retailer was also prepared to pass that on, you would

get a premium price for the sugary product. That would be for the

industry to decide how they approach that premium priced products, that

they would clearly seek to position it as a premium product. So for

special occasions when you might need a high level of sugar, I would

suggest that that would then appeal more to an adult market. The crucial

issue we have discussed today is about childhood obesity. I think

that bad, clearly, the effects are likely to be much more about

substitution towards reduced sugar products for two reasons, one is the

pricing incentive and secondly there is a very strong signal to consumers

and the public that the right thing to do is to substitute. So the

default does not become a sugary drink, the default becomes a low

sugar or reduce sugar drink. That is what we are trying to achieve here,

I think. There are issues about speed, Ireland assemble the industry

we are talking about major investment and time to adjust. I

thought it was an interesting move to design the levy with

forward-thinking in mind and allow for that adjustment rather than be

automatically introduced. But we want to see that perhaps switch in

consumption patterns. I predict we will see just sugar drinks become

the minority, they will either be left with energy drinks, where you

need to sugar for performing in sports and working out, or as a

premium product designed for adults where they have a high sugar

content. Do you worry about the emergence of mid-sugar drinks such

as Coca-Cola Life, which at 30% lower sugar than standard Coca-Cola

but nevertheless are still quite sugary, and the mixed messages that

sends out and whether actually there is a risk that sugar intake could

increase among some people who are currently drinking the zero sugar

alternative? Any improvement is an improvement. I

think it is a sizeable improvement. I think that is the critical issue.

The message has to, cross, reduce the sugar content. One of the issues

we have touched on, let me reinforce, is about portion sizes --

the message has to, cross, reduce the sugar content. I am delighted to

see new products coming onto the market where they are being

repositioned for a reduced norm. The advent of 250 ML pounds as opposed

to 330, for example. -- 250 ml cans. If it says that the recommended

portion surfing is ml -- two in June 50 ml, they will consume more when

the norm is 330 ml. Encouraging drinks to be packaged as 250 ml will

be a step in the right direction. I think the industry is making that

move, encouragement to move quicker would also be helpful. I come back

to the great enormous disparity in units pricing. B make this concrete

so we really know what we are talking about. A small bottle of a

carbonated drink, working at 25p per 100 ml, compared to a multi-buy

after working out at 5.7 p, that is a huge comet huge -- huge, huge

incentive to bulk buy, and edit the many consumers adhere to just

consuming one or two too rigid and 50 ml portions. As to the mid-sugar

drinks, do you think there is the possibility of consumer confusion

where those on zero sugar products do not quite appreciate that the

mid-sugar brands are full of far more sugar? Coca-Cola Life, if that

is your example, it is a tiny proportion of the Coke business,

less than 1%. The majority of people who have tried Coke Life had

switched from Coke Classic, but it is a tiny part of the business. The

focus for me, earning the business, is the best products to help people

make lighter choices are the zero sugar and zero calorie versions, so

if I take a much bigger part of the portfolio, which is Coke Zero, it

has done OK but it never really set the world alight. When we asked

consumers why it was not working, why are you not effectively moving

from Coke Classic to Zero, 50% of consumers did not realise that the

zero men zero sugar. So we relaunched at last year, we have

called it Coca-Cola Zero Sugar, sales are 40% up. You think it is a

light bulb moment, that is the intent, to try and encourage and

nudge consumers into lighter options, that is the intent. It is

definitely the intended Coke, I believe it is the intent in the soft

rinks industry, therefore, again, back to my earlier point, it is

strange to focus in on the one part of the food and drink industry that

has been so successful at reducing sugar levels versus any other part

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

Dobson almost made my case for me, it is coming back this in thing you

mentioned, Mr Woods, control. Portion It is easier to shrink

individual servings and shrink chocolate bars, but when you buy a

large bottle it is very hard for people to know how much is 250 ml,

if you ask the majority of people hear how much is in my classic glass

of water, I think a few of us would get it right. One of the things that

came out of the report was that the link needs to be much more simple,

on the labelling, spoonfuls of sugar, so it is very visual. That

does not help to divide the bottle up. Is there more the industry could

do on a voluntary basis, especially lines on the labelling, especially

now we are coming away from EU regulations, that would help? I

think that 250 ml cancers are very interesting area, we launched those

three years ago and we now have 250 ml cans in 12,000 stores up and down

the country, distribution is growing. They are becoming more and

more available. On the larger sharing bottles it is quite

difficult. People do not share, that is the problem. People do share,

that is what they do, but you are right, it is quite difficult to

judge. We have looked at the idea but not implemented it off-putting

portion markers on the side of the bottle, which I think you see

answered juices. On the side of all our packs we have just introduced

the number of portions which the pack contains, so a label that says

on a one litre bottle, this is ball portions. It is not quite where you

are going but it is starting to move in that direction. As for labelling

in the general sense, the Government has a recommended labelling scheme

which is colour-coded GDAs. At Coke B were one of the first companies to

adopt that and are still in only around a third of major packaged

goods companies which have adopted the Government scheme. The issue is

not, could we have a new labelling scheme question it is, can we all

use the same one? There is a Government recommended scheme and it

should be incumbent on manufacturers and retailers to use that, then

there would be a clearer understanding at a level playing

field. Does the Government scheme need more teeth if people are not

complying with it? I just wish more people... I don't how to make more

people comply, I guess that is for you to decide. I know at Coke the

decision we made was that consumers found it useful to put that

labelling scheme on our packs. So we put that labelling scheme on the

packs. It was less about the numbers on the GDA labelling and more about

the colour codes, the colour codes are quite intuitive. It is the

visual side, isn't it? Moving on to Andrew.

Thank you, starting with Professor Dobson, we focused a lot on the soft

rinks levy, it is important number Government's aspiration to take 20%

of sugar out of breakfast cereals, yoghurt, biscuits, cakes,

confectionery, puddings, ice cream and other sweet goods as well. What

impact do you expect those measures to have on the food and drink

industry? Measures will fail because they are

not targeted. They will have the same problems as the responsibility

deal relying on one-to-one agreements as opposed to an industry

requirement to do it. The reason I think the soft drinks industry levy

will work is because it applies to the industry. You either adjust and

reformulate or pay a tax. There's a clear incentive on everybody to move

in a direction. A vague statement we want to just without identifying

where, how you're going to achieve it, that is not clear from what is

stated, is clearly not going to be a successful strategy because it does

not even tell you where the starting point is of where you are going to

go with it. I have grave concerns about almost a broad aim rather than

an action by which this was supposed to be about. It needs to be much

more categorical on the product categories where they would like to

see the reductions at work on it on that basis. Thank you for being so

Frank. To be specific, what further teeth would you propose that apply

to measures that would result in successful outcomes in achieving

this 20% reduction across those nine categories mentioned? There is no

stick here. What is the threat if you do not comply? It depends of the

targeted nutrient in this case sugar, there should be some implied

threat that if you do not reduce by this level by a set period then

there would be sugar tax introduced for your particular category. The

government has said, it is vague, but said we will use other levers to

achieve the same aims if there has not been sufficient progress by

2020. Specifically what do you think we need? To make a threat credible

you have to sure what the stick is on this. To make vague suggestions

that there could be further action is not enough. You give the industry

a clear timeline when you would want them to re-formulate and you worked

on that basis and see what will happen. I am pressing you on what

you think should happen, and other tax? Yes. Why stop at soft drinks,

is what you are saying? Yes. In my mind it is not about the tax-raising

aspect of what you want, it is about incentive structure that you want.

You want to change the incentives in the way the industry formulates its

products, the way in which they are sold under way in which consumers

buy them. You want all of them to substitute something that is reduced

sugar. That is what your ultimate aim is. We have seen the

effectiveness of the soft drinks industry levy because we are aware

some companies are already be formulating and planning, whether

brand manufacturers or own label. We are seeing the effectiveness. It is

a very good device if you are clear on it, provide the incentive and say

the way to avoid this is to make the changes now or work a structured

plan with a clear timeline. It is the lack of a clear timeline and the

lack of consequences if you do not work to it that troubles me. You

have been admirably clear. Can I ask from a comment from the British

Retail Consortium? We are more optimistic. I would not say the plan

is going to feel. I think it will have certain success. To get full

success certain things need to be introduced. We have called for a

level playing field. We understand that this time around more

conversations are being had with companies that perhaps have not been

engaged before. We strongly believe that the regional ambition, which

was to engage with every single company that has 15 plus outlets in

the country, should be pursued, and that is the minimum level of

engagement we need. To challenge you, the soft drink levy has been

really effective already, why not replicated for these other nine food

categories? I believe there is a way we can reform. We add in the process

of moving towards products that are lower in sugar unlike in the soft

drink category is not alternatives in the case of sweeteners or other

ingredients are freely available to get products that are lower than

sugar. The driver that has been acknowledged to reduce sugar in some

of the categories, for example chocolate, it is different

approaches being used for different categories. The additional element

that we believe is required, having gone through detailed category

meetings for over ten categories that have been identified, is a

little bit more detail. We feel the approach of having maximum targets

in the way we have for assault, as opposed to overall production of 20%

per category, we feel these will enable companies to have a bit more

guidance as to what a reasonable level for certain types of

subcategory would be. What is achievable and reasonable as the

quantity of sugar. To finish, to ask each of you how you think this

should be evaluated and success measured? It is a really interesting

question. There's a number of elements and this is being

discussed. The focus at the moment is on the reformulation element.

There is some measuring tools that have been discussed that will show

how much we are progressing. There is talk about measuring the baseline

for each one of the categories and measuring it in a year and that

would give is an indication of whether we are progressing in the

right direction. There is other aspects such as how we make sure or

understand that we are moving in the right direction for portion sizes.

It is more difficult to understand what that measure would look like.

Talks about volume of sugar but that would not necessarily specified or

correlates directly. That element is unclear. We are thinking about what

that measurement might be. It has been suggested that sales figures

might go a long way in indicating that progress is being achieved. I

am not sure a tax is a good way to achieve the goals set out. I am

talking about the whole plan. In 2020. It is not about raising

revenue. This is about trying to reduce childhood obesity rates. You

have to find a way, I do not know what the measure is, but that is the

goal. It strikes me that what we have is a very narrow firm policy

which is the soft drinks industry levy which is targeting a sector

where sugar consumption is the cleaning very fast so I would be

surprised if you use childhood abuse AT should end goal of the measures

that have been argued so far been make much of a difference. You need

measures, the end measure has to be whether we see the curve coming back

down, and that was why there had been a call for extending the

measurement programme of children, but that will take quite some time,

so you need short-term measures. I am not sure what they are four

sectors outside of soft drinks. OK. Evaluating the approach, not just

one piece of it. My comments are specific to advertising regulation

and clearly one of our concerns would be to monitor whatever the

consequences of the ban coming in, Ofcom was concerned about other

areas where HFSS came to. We need to be vigilant about changes in the

market. We need to stay on top of the evidence base. As we always do,

we want the success of any measure we take, to try to improve on any

kind of ambiguity in the rules. Talking about the extent to which it

is clear to advertisers there are clear audience measures they can use

to apply the 25% test. It is the concern to remain vigilant.

Professor. I reflected that there are aspects that trouble me about

the action plan in terms of its lack of direction beyond the soft drinks

industry levy. I like to see very clear targets and milestones to

achieving those so it is a very clearly understood plan that

everybody who is involved in the industries and consumers can see. It

is that lack of commitment and direction that troubles me, that we

could be here in a few years, nothing is improved, nothing is

changed. There has been reformulation of some products but

not enough to stop what is an epidemic. Whichever way you look at

it, that is what has happened. We know that these children and

overweight children are likely to become obese and overweight adults.

That imposes huge health costs, has the burden on society and reduces

the quality of peoples lifestyles and living. This is the fundamental

that we as a nation get this right and we have an opportunity and we

have to seize that opportunity. I would like to see more direction on

price promotions. They are an issue. Why? Because of temptation.

Temptation awaits us all. I suffer from the doughnuts in the petrol

station. I suffer from temptation all the time. I am always reminded

that the success of many industries and companies relies on

availability. Coca-Cola has been enormously successful. Amazingly

successful company, because of trying to keep products within arms

reach, accessible, and that is the same for many food and drinks

companies. The one thing that is not even mentioned in the policy as far

as I can see is about food, drinks and nutrients in and physical

activity, is the thing that is in this container in front of us, tap

water. Not bottled water necessarily. Almost free. If we

encourage parents and children to drink more, make sure we put it

within arms reach for them, what a difference it would make. For

example, why is it you cannot go to a fast-food restaurant and be served

tap water? You have to order a value meal, and burger, fries and a

carbonated drink. Why are they not giving you tap water and taking off

the price of the carbonated drink in the value deal? You are being

encouraged. Why is there not a water fountain available there so that

rather than have a freebie fill of a sugary drink you can have free

water? There are other environments. Make it a policy that for children

everywhere and schools everywhere, there is freely available tap water

available to them. Get that message over to parents of that when they

sit down in the evenings ready for dinner they are serving water, not

another drink. We are doing our bit. We are. I reflected on that. I am

conscious of the time. One final question. I imagine you will be

aware of the Channel 4 dispatches programme that was on our screens

just over a three months ago, the secret plan to save that Britain.

The original draft obesity strategy. I thoroughly recommend the

programme. It should want the government originally intended to

present in their strategy. Many things in the draft unfortunately

did not make it to the final strategy. In the draft plan there

was a sentence which said that we must recognise increasing amount of

exercise children undertake will not in itself solve childhood obesity,

the number of calories you burn through physical activity is dwarfed

by the amount we can easily consume through what we eat and drink. Would

you agree? That exercise on its own will fix obesity? No. That what you

burn through physical it ever day is dwarfed by the amount you need to

drink. That is why we are getting bigger, we consume more calories

than we burn. That seems clear. We have few before us as one of the

companies, of which there are many, who do your bit in the field of

tackling obesity. Perhaps you can share with us why it is that you the

company spent so much of your income on physical activity programmes? On

your website it is over ?6 million. Subtitles will resume on 'This Week

In Parliament' at 2300.