Our recent webinar focused on how FMCG brands can get HFSS restriction ready.
Our panellists shared new perspectives and opportunities for HFSS and non HFSS brands, going beyond 2022, discussing key strategies for FMCG brands to thrive in the future.
We covered where brands should be investing and diverting budgets that were previously focused on soon to be restricted strategies. As well as brand and portfolio strategies, insight, shopper marketing, activation, packaging and social and digital.
If you’d like to find out more about how we can help you navigate the new HFSS restrictions, book a place on our HFSS Workshops.
Our panellists were:
- Sophie Daniels, Coco Pops Brand Manager – Kelloggs
- Nicola Matthews, UK Head of Marketing – Tony’s Chocolonely
- David Burns, Planning Director – HeyHuman
- Neil Davidson, CEO – HeyHuman
- Liz Richardson, Managing Partner – HeyHuman.
Neil Davidson:
Good morning and welcome I’m Neil Davidson from HeyHuman. And we’re going to talk about the roadmap for 2022 and beyond, in terms of HFSS. In terms of the structure for today’s session, brief introduction to us. We’ll then have a presentation on a perspective on HFSS, and then we’ll have our panel session. I’ll remind you then, you can also put in questions live, although some of you have already sent in questions beforehand.
A brief introduction to HeyHuman. In terms of our three, sort of, offers, so HeyHuman itself, although we’ve got a heavy focus on social experiential as well, I guess, in all fashion terms, we’re a sort of comms and advertising agency. And a lot of experience, in not just HFSS categories in the UK but, I guess, our interest in this area comes from working with other clients globally, where restrictions are already in place. So, alcohol, globally, would be a very good example. And then, HeyLab is particularly relevant because HeyLab is our neuroscience research and consultancy offer, and we do a lot of testing that is relevant to shopper, retail and also just effectiveness in a restricted environments. And then, HeyStudio is very much about agile content creation, which is going to become more and more relevant as clients in a HFSS environment, explore new channels and new ways to respond to the restrictions.
So, that just gives you a bit of context about us. Now, rather than go into the data of some of our clients, et cetera, I thought maybe the easiest way to introduce you to clients and the kind of work we do, is a very short reel of some of our work over the last couple of years. Okay. So, we can play that. (singing)
Great. So, that hopefully gives you just a sense of us as an agency. And then, in terms of what we’ve been doing in HFSS. Based on some of the experience we’ve talked about, we’ve been doing consultancy work, activation focused workshops, helping clients with what actually HFSS client compliant retailer activations look like. And also, I think something that’s we’ve found is a really useful tool, and I think will become even more so in a new sort of environment and new relationships with retailers, is running brand and retailer co-collaboration workshops, so that strategies and activations get built and bought together. And then, I mentioned already, we’ve been also doing a lot of neuroscience based research into HFSS, and optimizing it. And then, finally, relevant to that NS work as well, is optimizing packaging in content, in ways that are going to be more relevant for this restricted environment.
Okay. So, hopefully that gives you a sense of us and HFSS. So, just a brief introduction, I’ll maybe go into a bit more detail in the panel session as well. So, I’m joined by Liz Richardson, who’s MD of HeyHuman. Also joined by Nicola Matthews, whose head of marketing, UK and Ireland. Sophie Daniels, who’s Coco Pop’s brand manager. And David Burns, who’s planning directed HeyHuman. So, we’re going to go onto our perspective on HFSS. I’m going to hand over to Liz and David to share that.
Liz Richardson:
Thanks, Neil. Morning, everybody. So, as Neil said, we’re going to give you a very, sort of quick introduction in terms of what HeyHuman’s perspective is on HFSS. I’m going to you about the immediate things that we believe the brand should be doing. And then, David will talk you through our roadmap.
So, I thought what would be worth doing is actually just to quickly recap on what the legislation is actually going to mean for brands. As we know, obviously, the plan is to implement it in October of 2022. There are rumors that it may change and it may be pushed back, but obviously, at this stage, we obviously can’t confirm that. And I think it’s also just really important to remember that, actually, the reason that it’s being introduced is to combat the obesity crisis in the UK. And actually, largely both shoppers and retailers have actually been quite positive about the introduction of it.
So, first of all, obviously, the first thing is, is going to be about where products are actually cited in store. They’re no longer… No HFSS products will be available at the store entrances, at the aisle ends or the checkouts. Basically, within two meters at the front of the store. That’s going to be applicable to both the actual physical stores, but also online stores as well. Promotions, as well, need to be re-looked at. So, volume promotions are going to be limited, but there is still going to be the opportunity to run some form of discounted promotions. Plus also, on TV. So, there’s going to be a 9:00 PM TV watershed for ads that actually specifically include HFSS products as well. And that’s also going to be covering on demand programming services too. And there’s also going to be restrictions as well, of paid for HFS advertising online.
Now, in our view, there are two ways that brands can actually deal with these restrictions. You can either take a very defensive approach or you can actually be quite proactive. And we actually, as an agency, think that there’s a real opportunity within restrictions. To actually make sure that you’re focusing on developing, sort of, brand building activity. So, really shifting away from developing tactical promotions, to much more brand orientated promotions. And one of our clients, probably about eight or nine years ago now, actually, when we first started talking to him about restrictions and what it means for brands, he actually said this statement, which we think actually encapsulates it really well. And that is, is actually, “Being restriction ready is an insurance policy that always pays out, no matter what it does or it doesn’t happen.” And I think, actually, it is about good marketing. And hopefully, over the course of the next few slides, that you’ll see that, that’s what we are going to be focusing on talking to you about.
I mean, I think it’s obviously very clear that we are in a period of unprecedented change. And the rules are being rewritten. We’ve obviously just come out of COVID. We’re obviously seeing huge levels of inflation. And on top of that, we’ve also obviously got to deal with HFSS as well. But I mean, I think we see it as really an exciting time where we can actually really rewrite the rule book. And actually, really make sure that we’re not just relying on the old way of working, because obviously shopper behaviors are going to be changing. But it’s really a time to make sure we’re testing and we’re learning about new ways of actually engaging shoppers and activating brands within the retail space.
So, over the course of the last sort of six months or so, what we’ve found is, is we’ve been talking to retailers and we’ve been talking to brands as well. And actually, depending upon who we’ve talked to, everybody’s at various different stages of their implementation. But what we thought we’d do, is actually say there’s five things that you need to really make sure you’re focusing on now, to make sure that you’re ready.
So, the first thing is, is actually making sure that you’re focusing on what activities are you doing that are actually driving sales. And that’s going to be important, because we know, obviously, some brands are going to be delisted. But obviously, if we’ve got sales in there, then obviously you’re going to be more likely to continue to be [inaudible 00:10:14] stocked. The second piece is about actually making sure that you are in your shopper’s favorites. We know that obviously there’s going to be restrictions, in terms of actually how you can show up on retailer websites. So, it’s really important that you are already in your shop favorites. So, how can you actually do that? And how can you make sure that you’ve optimized your presence, in terms of your brand imagery, on those sites as well?
The third thing is really understanding what space is actually going to be available. So, the retailers are testing a variety of different concepts at the moment, from power aisles to merchandising HFSS products. With non HFSS products, there’s also some digital merchandising as well coming in. So, it’s important to understand what that actually is and what’s going to be available to you. And then, the fourth thing is actually really understanding, what’s your role in the category? Are you a beacon brand? Are you a brand that actually is also going to help the retailer deliver their agenda? And I think, the other final thing is, is that retailers want to deliver their health and wellbeing policies to their shoppers. So actually, it’s really understanding what role can you actually play within that, to make sure that you are able to leverage those retail agendas.
So, just in terms of what you’re going to see today, and David will take you through this. So, part one is going to be looking at the immediate and the existential piece, in terms of thinking about sales growth and also market share. And then, he’ll do a light touch in terms of looking at the longer term and strategic piece. Looking at things that can obviously be put in place around share price, market cap and then the ongoing business viability. So, I’ll hand over to David.
David Burns:
Thank you, Liz. Okay. So, it’s worth saying that this is a time of change. We can see that. That’s obvious. But human psychology broadly remains unchanged. These are products that people are still going to give their kids as a treat, now and again. They’re perfectly permissible treats, that’s absolutely fine. And that understanding is key to navigating the restrictions that are about to come upon us. That’s not cynically trying to circumnavigate the law, that is not going to do anyone any favors in the long term. It’s about sticking to the letter of the law and succeeding where we do it. Okay?
So, there are some old rules that still apply. There’s always going to be limitations for us to deal with. As marketers, our sector is incredibly adaptive and resilient to those limitations, because they come along every now and again, and we just have to deal with them. Now, humans, fundamentally, don’t change as much as marketers think they do as well. We are cognitive misers. Now, what I mean by that, is that we look for the familiar and the reassuring when we are scanning any shop, any situation. It’s how we are wired. But the slight footnote to that, is that until people approach their thirties, younger consumers, younger people are hardwired to novelty. Meaning, that if we get into their repertoire in their twenties, there’s a good chance that we’ll stay there.
So, there’s a balance to be struck between the familiar and the reassuring, which we look for now, and something that turns people’s heads. Now, there are also new challenges to face. We would be remiss if we didn’t say that. Creativity shines in advertising and in marketing, where brands voices are inhibited by legislation. You can go back five decades and see that as a fact. There will be a new retail environment that we are going to have to navigate, which is going to be as much about the digital fulfillment experience, i.e., people get… Fulfillment brands, I would call them, like Gorilla and Getir, who kind of enable us to tap into our basis desires to fulfill some sort of digital dopamine that we need to get stuff. And that’s something that we’re going to have to deal with.
We’ve got a clear challenge to keep people’s attention and nurture their interest, as well as become a habit in their digital shopping basket. And there may be a diminished reliance on physical fruitful, as the rise in IDed sales. And what I mean by IDed sales, is pretty much anything whereby you buy something online, you have to give a little bit of information about yourself. But that is also in your opportunity, which we’ll come on to.
Okay. So, in really quick summary, I’ll keep quite a high pace here. What the rest of 2012 looks… 2022, I beg your pardon, looks like, is a bit like this. The immediate and existential threat. We are in quarter one of 2022. And that is just simply about getting your head around the space that you have, and what you can put in it. As we go into quarter two, we need to understand the new limits upon physical demand. I.e., if there’s going to be less physical fruitful, how do we rethink things like our warehouse fulfillment? How do we consider web versus bricks and mortar sales? And understand how you actually protect your display space and your facings, when about a quarter of those opportunities are going to vanish overnight. As we get towards what we believe is D-date for HFSS, it’s about understanding the role that packaging can play a better sort of synchronicity between wholesalers, brands and retailers. And getting strategic with your portfolio and working out what you hero and how you use non-compliant SKUs effectively and in the right places. Okay?
So, there are five stages in the next eight months, very broadly. The first one is if you cannot speak explicitly about your product, return to your roots. Tell people about your brand. Burger king did it brilliantly with a little bit of nostalgia. They dialed up the latent love for the brand, they didn’t talk about specific products. But everyone kind of knew what that inferred. So, the takeout there is just brand stories can maintain your mental availability when your physical awareness is under threat. The second is finding a deeper human understanding about how humans actually think about stuff. So, there’s a longstanding story about Wispa, where people kind of forgot that it existed and it was plummeting. And Cadbury’s, very cleverly, created a sense of manufactured scarcity where they threatened to delist, and there was a public backlash. So, the takeout there is that deeper human understanding helps you find uncommon solutions to uncommon challenges.
The third one is about reprioritizing your portfolio, as we said. Now, as a Scot, we love IRN-BREW. It’s probably the least HFSS compliant soft drink in the market. It outsells Coke in Scotland, about three to one. But even they are on board. They realize now that their hero product is their extra product line, which is sugar-free. So, that’s their hero and above the line media. They still talk about the other full fat version, that’s absolutely fine. But the takeout here is that if their parent brand is strong enough, HFSS compliance SKUs like Xtra can actually still do a portfolio awareness job, and that’s really important to know.
In terms of rethinking shopper, just basically reconfiguring your store real estate. Where can you speak? If 25%, or 26% rather, if your real estate is disappearing, how can you work with retailers to circumvent that? So, for instance, Mr. Kipling are now listing cakes closer to the bakery aisle. And the last one is about using your packaging wisely, because packaging signals massively. Now, Coke, a couple years ago, did the personalized labels. It tapped into a number of human needs, personalization, scarcity and belonging. So, the takeout here is that if you have decreased opportunity to speak overtly, packaging has really got to work hard for you, like it did with Coke here.
So, that’s those five stages. If we just quickly flick onto the next one. Generally, how your shop relies upon five things. Your gravitational pull, i.e., how noticeable you are. It’s about that building or dialing up of latent and longstanding brand love that people are drawn towards. Roadblocking, where you do things differently. So, everyone knows Baileys, everyone knows that they’re an alcohol brand, but they slightly pivoted to a dessert ingredient brand, which was really, really clever, because it just sort of roadblocked people and made them consider the brand in another context.
Signaling is, as we’ve said, really strong. Cadbury’s purple is such a strong signal that they can remove all lettering on their part and you still know it’s Cadbury’s. So, there’s the understanding of the implied power of your visual brand when you can’t speak explicitly. Do you have strong enough key identifiers to actually use it like that? Aiding navigation is really important. Again, it’s just about understanding, if all of a sudden 26% of your store real estate is unavailable to you, how you help the customer move around the store. And the streamlining of the journey relates primarily to digital. Because if you can get in people’s digital favorites, then you’re there and it’s a really good place to be. Basically, that’s winning.
And ultimately, it comes down to two things here. Let’s move on. Be disruptive, that’s about gravitational pull and roadblocking. And be findable, which is about signaling, aiding navigation, streamlining the journey. So, on the left hand side is impulse, and the right hand side it’s more of a planned shop. Okay. And the future beyond 2022, I will look at very, very briefly. Because this is kind of where we can really help you out.
The strategic and long term need is going to be about understanding the psychology of the shopper mindset in a restricted category, but there’s still a demand for your product. And also, just bringing to bear all the learnings of the physical space, the digital aisle, new fulfillment models with the psychology about the shopper experience, to create a sustainable roadmap. So, the first thing’s getting your match fit up until quarter three this year, then it’s about making sure you’re future-proofed.
So, in summary, five things to say. Emotionally engage using your long standing brand love. Seduce a little bit with novelty and inspiration. Build on your key brand assets and leverage them as category cues. Make it easy for shoppers to find you. Become a habit, either digitally or in store by navigation. That’s us. Thank you.
Neil Davidson:
Brilliant. Thank you, Liz and David. So, if you got any questions based on that or anything that comes up in the panel session, just put in the chat function. So, I’m going to be joined by Liz, Nicola and Sophie. So, you’ve already met Liz. Welcome to Nicola and Sophie. Nicola, I noticed that you call yourself the Countess of Cocoa, on your LinkedIn profile. That’s all the credentials you need for this panel session, for sure. And Sophie, as we’ve chatted before, you work on a HFSS compliant and a non-compliant brand in Coco Pops and Craves. So, I think that’s really great to have those kind of perspectives. And as I said, Liz and I have been thinking about restricted markets and marketing for far too long. So, if you don’t mind if I kick off a question for everybody. But I’ll start with you, Nicola, if that’s okay. So, where is your business currently in its own sort of journey planning for HFSS?
Nicola Matthews:
Hi, everyone. Yeah, so where are we? So, just for those of you who don’t know, we are a chocolate brand. So, definitely high in fat, sugar, not healthy at all. But we’re also a small brand, so we are a challenge brand in the chocolate industry, compared to the big, big heritage brands, and going up against them with our more responsible way of sourcing chocolate and trying to change the chocolate industry from within. I think we’re kind of still in the process of really understanding what all the new rules will mean for us in practice. It’s definitely going to affect the larger brands in a much more significant way. So, we definitely don’t have a full-time team on it or anything, or an agency working on it. We just have a few of us trying to navigate our way through what the rules will actually mean for us on the ground.
And it’s also, I guess, been quite hard, we feel, to get clear information as a small brand, on all the nuts and bolts involved. I think that seems to be a theme for a lot of others. So yeah, it impacts us far less than some other big brands, so our focus remains on what our strategy has always been, building our brand, increasing brand and the issue awareness, as Liz mentioned. So yeah, not a massive change for us, but we’re still kind of waving our way through it all.
Neil Davidson:
Brilliant. Okay. Thanks for that, Nicola. Sophie, sort of same question to you. Particularly, as you’ve got your feet in both camps.
Sophie Daniels:
Yes. Yeah. I think, as you can imagine, HFSS has been a really hot topic for us, I’d say, over the last year or so. And we’re now in a really interesting stage where we’re actually implementing and trialing some different types of activity. And you’ll see some examples of that already in market actually, as we kind of gear up and get ready for the changes. So yeah, I guess, one example that’s already in market is how we’re really reimagining what the fixture looks like for some of our hero brands, like Pringles. So, using things like permanent POS to drive brand messages at the point of purchase. And I think, Kellogg’s is in a really interesting position of, we’re obviously a very, a large manufacturer, but we have a really broad range of brands that fall into different categories and fall somewhere on HFSS’s spectrum. So, we’re really taking a wide portfolio approach to understand what tools and techniques we have that can work best with different brands across the total portfolio. And this is obviously paired with our category and our commercial recommendations, based on all the insight and data that we have available too.
Neil Davidson:
Supplementary for you then, do you have, because I’m just… We’ve seen different organizations tackle it in different ways. Do you have a HFSS guru, specifically looking over the portfolio, or how does it work?
Sophie Daniels:
Yeah, I would say the approach that we’ve taken is kind of to empower and inform everyone in the business. So, all of the members of the sales and the marketing team are really, I would say, upskilled in everything that’s going on. So, we can then make sure that we’re thinking about that and we’re implementing it as we’re planning for the future. So yeah, we’ve got a team of people that are working specifically on HFSS, but also making sure that everyone is in the know, as well.
Neil Davidson:
Brilliant. Liz, and I’ve met somebody who has a, I love HFS… I Heart HFSS mug.
Sophie Daniels:
Wow.
Neil Davidson:
If you’re in the audience, we want one of those as well. Liz, you can give, I think, a bit of a helicopter view, both clients. But also, retail as well. In terms of where do you think… Big question, but what’s your perspective on where people are on the journey?
Liz Richardson:
I mean, I think it really varies. And I think, actually, those two answers say it all, really. Because I think all the, sort of the larger corporate brands are obviously ready or getting ready. And actually, I think the whole thing is, like you say, they’ve done a lot of work in terms of portfolio piece and actually focusing on more brand building activity. But obviously, talking to more entrepreneurial brands, then yes, obviously there’s an awareness of it, but perhaps not necessarily as prepared. I think, from a retailer perspective, I think it’s really mixed. But I think, we’ve got to be… Like we said, I mean, we’ve had so many things to deal with and there’s still so much ambiguity, I think, from their side, in terms of what can be implemented.
And I think, the whole thing is, is that we said, it’s about testing and learning. So actually, the retailers also need to be given time to actually test and learn. But in terms of what I’ve seen, I mean, basically we know that obviously they’ve been looking at things like power aisles. They’ve been looking at how can they merchandise both the non HSS products with HFSS products. And I think, as well, the other thing is also about the role of digital and how can you use digital media in store, to actually direct people to the HFSS products. Because, as we said, there’s still going to be a demand for them.
But I think the key thing is, it takes time to actually test it, doesn’t it? But I think the other thing is, [inaudible 00:27:57] they’re aware, like I said in the piece, they want to deliver their health and their corporate responsibility agendas. So it’s actually, there’s that piece too, isn’t there? And there’s also the, like you said, Sophie, it’s about the commercial piece as well. Because obviously, they’re going to be looking at ways that they can potentially offset losses from some of the promotions that they have been able to run, that they now can’t run. So, there’s very lots of different pieces in the puzzle, I think.
Neil Davidson:
Good. I’ve got a live question. And as you are our experiential guru, I’ll give you this one first.
Liz Richardson:
Thanks, Neil.
Neil Davidson :
Well, I think it’s a good one. So, thoughts on the role for experiential in this context, going forward?
Liz Richardson:
In HFSS?
Neil Davidson :
Yes.
Liz Richardson:
Yeah. It’s going to depend upon where it actually occurs because, obviously, the main restrictions are going to be in store. So, you will not be able to run large scale experiential on HFSS products in store, would be my understanding. There wouldn’t be any restrictions, in terms of actually taking that and running it yourself, obviously, away from store. So, there would definitely still be a role for experiential, within that piece. Because, remember that, obviously, this legislation, it is impacting. It’s to do with the size of the store. So obviously, if you were a Hotel Chocolat or you have your own retailer estate, you can still run. And let’s say they are under a certain square footage, then you could actually still run those types of activities. So, yeah. So, I sort of see it away from store rather than obviously in store.
Neil Davidson:
Yeah. And just a passing observation for me, I guess, is some clients are talking about experiences rather than experiential, which then gets you into digital and at home-
Liz Richardson:
Absolutely. Yeah. I mean, I think the key thing, like we’ve been saying around all of this, this is about a shift away from tactical to now brand building activity. So, how can you use experiential to develop that brand building and that experience? I think that would be absolutely key.
Neil Davidson:
Brilliant. Thanks. Nicola, we talked about it in the presentation, the challenges and opportunities for brands, particularly in retail space. I mean, what’s the Tony’s perspective on that opportunity, challenges? Because you’re coming at it from a very different place.
Nicola Matthews:
Yeah. I definitely see both challenges and opportunities. So, obviously, a key challenge for us will be that we’re an impulse product. Most people don’t have bars and chocolate on the shopping list. You pick them up on impulse when you’re walking past with the rest of your shopping list, and that definitely is a lot of the time off feature and display. So, that will be a big change. But we also have a lot less feature and display than the other brands. So, we will not suffer as much as the brands that have shippers every single day of the year, in the big supermarkets. So, it’ll definitely impact them more disproportionately I think, and potentially make a more level playing field.
We also don’t really promote heavily. We are trying to educate people that chocolate shouldn’t be cheap. And when chocolate is cheap, it’s likely that farmers in west Africa are paying the price for that. So, our volume sold on deal is about 38% at the moment, versus bigger brands like Cadbury is at 66%, and Lindt at 61%. So, we think it will be moving towards, like say if you said creating more excitement at the fixture and that’s a big opportunity for us. We have a beautiful rainbow of color of chocolate bars that really kind of jump off the shelf. So, that’s an opportunity for us to do more there.
And one risk I have a bit of a hypothesis about, is that since HFSS brands can still advertise their brand, but not their products, this could potentially lead to a lot of quite misleading claims being made about sustainability, responsible sourcing and ethical credentials. So, lots of chocolate brands already really take advantage of the naivety of shoppers and their desire for a shortcut to ethical, with their certification marks and claims on pack. And I think this potentially could move to above the line and ultimately just a lot of widespread purpose washing and greenwashing. So, that could make it harder for brands like us who are truly walking the talk when it comes to those things, to cut through with our brand claims. But it also offers us an opportunity for us to be even bolder in calling those out. And we’re the kind of brand that would do that.
Neil Davidson:
Yeah. I think it’s an interesting point that we chatted about before. And it goes back to the point about people being cognitive misers. If you can flash something on pack that doesn’t actually stand up to regular, how well does that actually do a job, potentially better than it should? Don’t know. Sophie, your thoughts, in terms of opportunities and challenges. How are you seeing that?
Sophie Daniels:
Yeah, I think probably the biggest challenge or opportunity or both, is how we really need to reimagine the path to purchase and the shopper journey. I think this is a massive challenge. But as the rules of the game are changing, it’s also a good opportunity for brands to explore new media types and be more creative in their brand communications. So, I guess, for thinking about HFSS brands, it’s how you get in the consideration set, pre store. And obviously, different approaches will be needed here to reach that mass audience, that you might have used TV media to, previously.
And then, how do we drive shoppers down the aisle using your strong brand equity queues at the front of store? And then, how we disrupt and reimagine the fixture to drive that conversion. And that could be through the likes of POS or as we’ve been saying, packaging. So yeah, there’s a lot of different things going on at a lot of different stages in the shopper journey. Yeah, I mean, I would see it as an opportunity, like I say, to try new things and to discover new techniques for how to reach the shopper.
Neil Davidson:
Brilliant. Thank you. I’ve got a question, but I’ll hold onto that one for a minute. Liz, and I’ll give this question to everybody. Because like you said, it’s not an easy question, so I’m going to flag it. I mean, I think there’s still a lot of… We’re talking about October. But obviously, the machinations of legislation, the machinations of parliament, the machinations of lobbying, mean there is still a lot of uncertainty, both what it is and when it is. Everybody’s walking to October, but as we know, the world’s sort of a bit upside down. Let’s start with you, Liz. What’s your interpretation of what’s likely? And I’m obviously thinking shopper, retail and advertising. If you had a…
Liz Richardson:
Crystal ball.
Neil Davidson:
A crystal ball. That was the exact words I was looking for. If there was an HFSS branded crystal ball, what are you seeing coming?
Liz Richardson:
In terms of whether it’s going to be pushed back or just generally?
Neil Davidson:
Well, both things that I mentioned. What the detail is likely to be or what it is likely to be, and when it’s likely to be.
Liz Richardson:
Yeah. It’s a really hard question, because I think there’s so much ambiguity around it. I think the areas that there seems to be the most ambiguity, from a retail perspective, it’s around understanding the categories. And I think from their point of view as well, like we said, actually, it is a time to actually test and learn. And I know things are being started now, but there’s still a long way to go for them to actually work through those plans and actually make sure that it’s going to be effective for them. And also, that actually, people are actually going to be able to find the products in store as well. I think they probably need longer to do that.
I think the other area that really needs sort of fleshing out, is the online piece, because I think there’s a lot of ambiguity around that. Because, obviously, there seems to be a bit of clarification. Because, obviously, as a retailer, you could put your own brand actually on your own site, but actually for your brand of product you can’t. So, actually, how does that work? So, I think, for me, those are the two things that really need to be fleshed out in quite a lot of detail, and seem to be the areas that are causing the most confusion.
In terms of timings, I mean, these things do take time to implement. And I think, given where we are at the moment, in terms of recovering from COVID and also from, obviously, the periods of inflation and everything. And it’s more change. So, I would’ve thought that there would be some benefit if they were to push the timings back, because I’m not sure everybody has really had the time to prepare for them. How long? Can’t say, but I do think they should be pushed back.
Neil Davidson:
Great. Thank you. Nicola, in terms of Tony’s, are you assuming it’s going to happen, and the best that you know, you’re just going to work to that? Or, how does it work for your business?
Nicola Matthews:
Yeah. There’s so much ambiguity for us. We don’t have a Bible of like, this is exactly what it’s going to be and by when, so we’re just kind of preparing as best we can. But it’s not the biggest thing on our radar. We’re still a small brand and we have a huge mission to achieve, so our focus really is on that brand and issue building. And if we have to alter what we do in store and alter what we do online a little bit, that’s fine. We’re pretty agile. We’ll find a way around that.
Yeah. Still some unclarity definitely on, we don’t do a lot above the line, but we probably will in the future, as we scale. So what does the future advertising look like for us? We do lots of stuff like influencer marketing. So, how are we going to be impacted there, and then can we kind of pivot what we do there? We do a lot of organic gifting, and does that count? There’s lots of little nuts and bolts. But we’re still pretty small, so it’s all small things that we can be pretty agile about and pivot into new creative ways of building the brand and telling more people about the issue.
Neil Davidson:
Brilliant. Thanks, Nicola. Sophie, I remember, it would be probably about two years ago, talking to another large FMCG company, a marketing director, and him saying something along the lines of, “The pandemic is nothing compared to HFSS.” Which just told me that different organizations, it’s affected them in different ways. As someone in a… obviously, Kellogg is way up there in terms of scale, what’s the perspective you’re taking on it? “It’s happening, and this is our interpretation. That’s what we’re working to.” How’s it working?
Sophie Daniels:
Yeah. I think, taking a very proactive approach to it, is the way that we’re going about things. Because I think we have HFSS success in mind. And like I said, we have for the last year or so. But I guess, alongside that, we also have our kind of own set of wellbeing principles, which is also a really strong guiding force for us. So, I think it means that we’re kind of working on that timeline, that we have been working on our own wellbeing timeline for the last few years. Which means now that HFSS has come around, I think we are in that very proactive attitude towards it. And things like reformulation to provide better nutrition through our food. That’s been important for us, for years, and we’ve been reformulating for years. So yeah, I think we’re pushing forward and we’re keeping HFSS, those dates in mind. But it is actually kind of business as usual, because we’ve been working towards it anyway.
Neil Davidson:
Brilliant. So, I had a supplementary question for you, which sort of ties into this. And you mentioned, in terms of wellbeing. So, one of the questions in the audience was, “Does this mean brands should have an even bigger role in terms of education on moderation?”
Sophie Daniels:
Yeah. I thought a very interesting question. I think my reflection on that would be, when you work in FMCG, particularly in a large organization like Kellogg’s, I think there’s a really strong level of accountability for brands to be doing the right thing, in terms of providing nourishing food for consumers. So, I think, yeah, all brands should have that purpose led agenda that’s driving the point around moderation and health concerns, even outside of these new restrictions that are coming in. But ultimately, the restrictions are moving us all in the right direction. And I think as much as possible, we need to have positive intent with that. And yeah, move with the times and do what we need to do by our consumers.
Neil Davidson:
Great. Nicola, with that in mind, in my memory bank, in terms of Tony’s communications, I’m pretty sure you’ve had ones along the threads of, it’s chocolate. It’s never going to be perfect for you, but be aware. I mean, do you see a change in terms of anything, in terms of education or moderation around at HFSS?
Nicola Matthews:
Yeah. In the Netherlands, which is our kind of home market and where we have pretty much number one market share, in the first week of January, we called for a sugar tax in the Netherlands. So, we think that is absolutely the right thing to do. We’ve never marketed towards children. We don’t do any child marketing. We never have, never will. So that is no change. We definitely are not a healthy product and wouldn’t ever promote over consumption. I think our agenda is that we want people to still treat themselves, but trade up to a more responsibly sourced product and also enjoy it in a responsible way. So yeah, and absolutely no change for us really, in that respect.
Neil Davidson:
Okay. Brilliant. Thank you. So, I’ve got another question which I’m going to leave open for who wants to hold their hand up. So, it’s basically saying, do we foresee companies creating small runs of HFSS compliant products to show in advertising, if that makes sense? My interpretation is, hopefully not, because I think one of the points really is, if the industry, and I suppose, I mean, the comms industry and producers, don’t kind of play to the spirit of the law. I think there’d be a backlash from the government. And that’s what I’ve heard from industry bodies. But does anybody foresee anybody doing that?
Nicola Matthews:
I think so. I’m quite cynical about it. I said the same with the purpose washing and greenwashing. So, I think a lot of brands will. Have they got shareholders to create value for? And if they see this as kind of taking a lot of value out of their brands, I’m sure they will be thinking of anyway to get around it, to continue to keep that brand awareness and keep growing sales. So, I’m sure we will see some of that.
Neil Davidson:
All right. What’s your thoughts, Sophie?
Sophie Daniels:
Yeah. I probably would agree. But I mean, no one knows, do we? It’s going to be really interesting to see what happens in market over the next 12 months.
Neil Davidson:
Right. It’s rare on a call that people are more cynical than me, so I’m impressed. I’m impressed. So, on the upside. Going back to you, Sophie, if that’s okay. What do you see as the opportunities? Because you’ve got your, as we said, sort of your food in both camps. What are the greatest opportunities for HFSS compliant brands and products?
Sophie Daniels:
Yeah. I guess, taking the lens of Coco Pops, which has been HFSS compliance since 2018. I guess we definitely see the potential of upside, in relation to allocation of display space. And then, you’d also assume that the shopper media and the in-store environment might be less saturated. So, you might get a better cut through with your comms. And then, I think there is also a piece around consumer’s positive nutrition associations, as they come to understand the new in-store environment. So, if a product is on a display space, there might be a nutritional reassurance attached to that. And I guess, that’s really important for brands like Coco Pops, that is predominantly taste led, but we also have a really positive permissible nutritional profile. So, it could be doing a bit of a job for you in that area.
But it’s probably then an interesting side note to think about how the restrictions will actually filter down to shoppers and consumers. So yes, they will notice a difference in store when they’re shopping. But I wonder what level of understanding they will actually have about what’s going on, and if they’ll be any active communication to try and explain the motivation behind it and the detail of what’s happening.
Neil Davidson:
Yeah. Interesting. I used to work in government health marketing years ago, so I got some views in it. But I hold on for now. I mean, a supplementary question for you actually, which I think you and I talked about before this session. Have you got any plans to make your non HFSS compliant products HFSS compliant?
Sophie Daniels:
Yeah. So, we have a pledge as a company that four out of five of our hero brands from our cereal portfolio will HFSS compliant. I think there are some brands like Crunchy Nut for example, which is a very taste led indulgent product. And our consumers won’t accept a change so substantial if we were to try and make that HFSS compliant. I think that’s what I mean when I say we’re really taking like a portfolio approach. We’re looking at the brands where it’s suitable to reformulate and to make compliant, and where it’s right to do that. But then, other brands, like I say, like Crunchy Nut, that’s really well loved by so many people across the UK, it probably isn’t suitable for us to look to reformulate that.
Neil Davidson:
Brilliant. Okay. Nicola, any thoughts, in terms of my previous question? How HFSS compliant brands and products might step in, particularly from your perspective?
Nicola Matthews:
Yeah, I think they’ll really benefit from all the great feature and display that HFSS products have had until now, and that’s a great thing. There’s a great opportunity for more impulse purchase on those, who are then driving additional trial. And like Sophie said, hopefully it’ll become a bit of a point to shoppers that actually everything on feature now or on the end of aisles, they can be reassured, is probably a better choice for them. And we completely agree with the whole, why HFSS is the regulations, I think, are coming in to tackle the obesity crisis. And if more people would choose better food options and then still treat themselves, but pick better options more often, that can only be a good thing. So, all that great feature and promotions for, better for you products, will just fuel that.
Neil Davidson:
Brilliant. Thank you. Liz, come back in.
Liz Richardson:
I’m back in. Thanks.
Neil Davidson:
Come back in. Something that you’ve touched on, and a question that’s got, is how you experience of how different retailers are responding to HFSS. I think you’ve kind of said it’s different. Just be interested in what ways?
Liz Richardson:
I mean, in the ways that they’re responding is through their testing and trialing. Like I said, I mean, some are testing power aisles. So actually, how can you make sure that you still have power aisles away from two meters from the front of the store. Others, as we said, I mean, they are looking at how you can actually potentially merchandise the HFSS products with non HFSS products. Others, they’re looking at how can you actually have media in store as well, to direct people to the HFSS aisle. So, there’s a variety of different things that each one is trialing at the moment. And obviously, as I said, I mean, they need time to actually test and learn from what’s actually going to work.
But I think, I mean, just going back to that other point, I think the key thing is, I mean, I do think there’s opportunities for non HFSS products. But I do think it is going to really depend upon the category that they’re in. Because at the end of the day, the retailers, they need to find a way of offsetting some of their losses that they’re going to potentially experience as a result of this. And I think, like we’ve all said, they also do want to deliver their health agenda as well. So, there’s a number of things that are actually sort of at play. So, I don’t think it’s going to be a slam dunk. You’re a non HFSS product, great, you’re going to get loads of additional display.
And I think the other thing to bear in mind is, is it’s going to be expensive, because actually, the whole point is that space is going to be at a premium. But I think, like we’ve all seen within the retail environment as well, it’s the power of the brand at the end of the day. Whether you’re an HFSS product or you’re not a non HFSS product, being findable and actually really making sure that people can find you and you stand out and you make the most of your pack and you make the most of shelf ready packaging, to make sure people see you in store, I think is going to be critical, to be honest.
Neil Davidson:
Great. I mean, you made a point there, which I think is the most relevant point to all of us. It’s possibly the most fanatically challenging legislation.
Liz Richardson:
Oh, thanks insightful that I came out with.
Neil Davidson:
I think we all need new teeth by the end of the legislation. I’ve got a question, particularly for Nicola and Sophie. Simply, how are you going to manage Easter and Christmas going forward? So sorry, particularly for you, Nicola. Sorry. Chocolate brands, how are you going to manage Easter and Christmas? Is it all over?
Nicola Matthews:
Yeah, great question. We don’t do any massive feature at those points in time, because we aren’t a big enough brand. So, we don’t warrant that space currently. So again, that will be one where we actually probably win out a bit more, because we’ve got bright, colorful, exciting novelty MPD that really jumps off the shelf. So actually, I think that will really impact the bigger brands much more because they usually do have those massive pallet displays and huge pallet shippers and tons and tons of stuff. So yeah, I’m as interested as everybody else to see what the store looks like at key moments like that. But I think that’s one way it will create a more level playing field for us.
Neil Davidson :
Great. Supplementary question just for me. Is there a Tony’s chocolate Easter egg?
Nicola Matthews:
Watch the space.
Neil Davidson:
Ah, so I can’t-
Nicola Matthews:
There’s lots of mini Easter eggs out at the moment. You can get [inaudible 00:52:42] mini Easter eggs [inaudible 00:52:43]. Watch the space with something a bit bigger.
Neil Davidson:
I’m just saying, that after this session, I’m going to Putney High Street, and I may be buying chocolate, I don’t know. But if you had a Easter egg, that would be great. It sounds like it’s in the pipeline.
Nicola Matthews:
Lots of Easter products, but yeah, no big eggs just yet.
Neil Davidson:
Okay. I mean, going back to retailers. For you, Liz, how do you see the relationship between brands and retailers changing because of the shake up? And you and I have seen how in other markets it has changed, and the role of insight and things like that has changed. So, your thoughts on that, Liz?
Liz Richardson:
I mean, my thought is, is that brands and retailers need to work in partnership. Because actually, it’s about understanding what are each other’s agendas, and actually, how can you work together in order to leverage that. So, I mean, for us as a… In my experience, we’ve worked very closely with Tesco, with Asdo and with Morrisons, where really, through some of our collaboration sessions, what we’ve been able to do is to actually, with that depth of understanding of the retailer agenda, be able to come up with activity that everybody wins. It builds the brand, it’s something that the shopper wants to experience and it also adds to the retail experience as well. And for me, that’s got to be the way forward. As we said, I mean, all the brands and the retailers also now have their health agenda as well, and you want to work together with them. For me, it’s much more about collaboration and understanding them. And that’s what we need to see moving forward. Less about [inaudible 00:54:30].
Neil Davidson:
Yeah. I’m going to steal. Because I’m going to ask Nicola and Sophie. I’m going to give you a minute to think about this. Maybe just one tip for people. We’re all in this together. Have a think about maybe one tip for people, based on your experience so far. I’m going to pull out your tip, Liz. I kind of feel like it’s the collaboration piece, particularly [inaudible 00:54:57].
Liz Richardson:
Definitely.
Neil Davidson:
Brilliant. Thank you. So collaboration, a different relationship with retailers is definitely what we’ve seen in brands and businesses that have grown through steal of market share and restricted markets, would be our little tip, I think. Nicola, have you got, slightly unfair question, just one tip, one thought for people to take away?
Nicola Matthews:
I would agree with what Liz said. Right back at the start, just really focused on building a brand and telling people. And Sophie said it too, outside of the store being in their consideration set. That needs to be the focus and just kind of do what you do best out there and not get too distracted by it. If you’re a small brand, obviously. If you’re a big brand, you have to be distracted by it, because it’s much more impactful. But yeah, just focus on building a brand, I think that was a really clear point.
Neil Davidson:
Brilliant. Thank you. Sophie, you get to sign off the session.
Sophie Daniels:
What an honour.
Neil Davidson:
I know. A thought for people to take away or a tip for tackling HFSS, based on your experience.
Sophie Daniels:
I would say, based on my experience, retailers are looking for support and guidance and ideas from brands. And I guess, in that way, the roles have slightly reversed a little bit. So yeah, coming back to everything that Liz has just said, I think the opportunity for collaboration and co-creation is stronger than it’s ever been. So, I think now is a really important moment for brands to be having those active discussions with the retailers and guiding them a little bit for where this could go.
Neil Davidson:
Yeah. I think it’s a really good point. My experience of talking to brands versus retailers, I would say more brands feel more further than the line than some retailers. So, that definitely is an opportunity, in terms of the two bits that I’ve taken out and that you’ve summarized really succinctly there. So, the collaboration piece for retailers are therefore leading to the opportunity for co-creation. So, thank you very much. We are going to end on time. So, just finish by thanking David, Liz, Nicola and Sophie for all your astute insights. And thanks very much to everybody who’s joined. And thanks for your questions. Thank you.