Retailers’ Promotions on Sugary Products: Should they be regulated?

24^th November 2015

A poor diet fostered by a rapid increase in the supply of affordable, processed food has been widely blamed as one of the major contributors to obesity. Associated to increases in affordability are the promotions used by retailers with such foods. Their impact is controversial because, on the one hand, retail promotions (price promotions, vouchers, in-store product placement, direct mail marketing, multiple-buy offers, etc.) have been pointed to as a key factor in expanding the expenditure on caloric rich processed foods; and on the other hand, promotions are also used by retailers for selling fruit and vegetables.

A recent report by Public Health-England, Sugar Reduction: The evidence for action, called for a ban on promotions of unhealthy sugary products. The report focuses on all sugars added to foods plus those naturally present in fruit juices, syrups and honey. It does not include the sugars naturally present in intact fruit and vegetables or milk and dairy products.

There are plenty of reasons to control sugar intake, as consuming too many foods and drinks high in sugar can lead to weight gain, which in turn increases the risk of heart disease, type-2 diabetes, stroke and some cancers, not to mention that it is also linked to tooth decay. The report states not only that obesity and its consequences alone cost the NHS £5.1bn per year but also the presence of health inequalities as children living in the most deprived communities have higher probability to be obese or overweight than those in the least deprived areas.

One of the conclusions from the PHE Report was the need to improve the environment that surrounds food purchases as it influences food choices. Particularly under fire came the use of promotions on sugary products.

The figure below, estimated using data for Scotland, shows the importance of promotions on the sales of several food and drink categories, particularly for soft drinks and sweet confectionery. It also shows a positive trend during the recession, which allows us to believe that companies used promotions to mitigate the effect of the decrease in the demand.

Research on purchasing behaviour has found that promotions not only affect consumers’ food and drink purchases by reducing the price of the products but also the type of promotions seems to be important. For instance, sugary products and in particular soft drinks tend to be promoted in multi-unit packs. It has been found these types of promotions lead to stockpiling, which has a positive effect on consumption (higher stocks make the food salient in the pantry or fridge alluring to consumption), especially for overweight consumers.

Another effect of multi-unit price promotions is that they can also encourage higher volume purchases by increasing the quantity specified in multi-unit price promotions such from ‘2 units for £2’ to ‘8 units for £’. This is explained through the concept of ‘anchoring effect’, which is that we have a tendency to use reference points to make decisions and evaluations, and sometimes these lead us astray.

One of the discussions as regards promotions is whether they tend to be more sided towards unhealthy products than healthy ones. Although the evidence on this is not conclusive, the truth is that it does not matter, as the main issue is to create an environment that do not encourage the consumption of unhealthy products and consumers need help when making their food and drink choices.

Finally, it is important to point out that while it is imperative to support consumers on their food choices, the general feeling is that it is quite difficult to improve consumers’ choices. This is not difficult to understand as there are a number of factors that affect consumers’ decisions beyond the price (not to mention that for most consumers the proportion of their budget dedicated to food is not more than 15 per cent). Things like habits, the time invested making thoughtful decisions about what to buy, the need to change from time to time what they consume to avoid boredom are just some of the factors that may affect consumers’ decisions and may explain why information campaigns have so little success. Therefore, it is important that measures such as the elimination of promotions to unhealthy products to be accompanied with improving the health quality of the food and drink assortment available to consumers with a campaign towards reformulation of products, reducing their levels of sugar.