Recommendations of the Review of Food Labelling Law and Policy

Stakeholders involved in food supply and consumption view food labelling as a means of obtaining information to enable an informed choice about the food to be consumed, whether it be in terms of ingredients, safety, nutrition and health or ethic and moral concerns. Increasing numbers of stakeholders, including special interest groups demanding greater emphasis on food labelling for consumer protection, have created competing interests and tensions over how food labelling should evolve in the years to come. The Review of Food Labelling Law and Policy, chaired by Dr Neal Blewett AG, was implemented to facilitate a more directed approach to food labelling. The Review Panel hope to achieve this through the 61 recommendations contained in the report entitled Labelling Logic. A review of the report is covered in this article. The relevant recommendation is given in the brackets, and specific details of the recommendations are available via www.foodlabellingreview.gov.au.

Policy drivers for food labelling
This report identified a number of policy drivers which can form a framework which will then formulate the principles for regulatory intervention, which will, in turn, direct the focus of labelling events. These drivers include consumer needs; industry’s need for marketing flexibility and minimal regulation; and government’s objectives in the area of individual and population health, particularly its preventative health role in reducing the risk of chronic diet-related disease.

The Review calls for a definition of public health to be included in the Food Standards Australia New Zealand Act 1991 believing that it could decrease ambiguity regarding the role of the food regulator and would place appropriate focus on broader public health issues [R1].

They also recommend the development of a comprehensive Nutrition Policy that includes a framework for the roles of the food label [R9, 10]. This Nutrition Policy would subsequently inform any changes to the labelling standards. This will in part address the requirement for evidence of significant health or behavioural impact and economic assessments for individual food standards, which currently can act as a barrier to more efficient food label use.

Government regulatory interventions
The Panel identifies an Issues Hierarchy in descending order of food safety, preventative health, new technologies and consumer values issues, which identifies responsibilities with respect to initiation of regulatory action, the modes of intervention and where rules and oversight should lie [R2]. For example, regulatory actions are primarily the responsibility of the government for food safety, preventative health and new technologies. In contrast, regulatory actions in relation to consumer values issues should generally be initiated by industry [R37, 38], utilising ‘misleading or deceptive’ provisions in consumer protection legislation.

Government-based initiatives are referenced in the Food Standards Code, with only some specific methods or processes of production being referenced in the Code in the case of industry-driven initiatives [R36]. For example, Country-of-origin (CoOL) labelling as a consumer values issue would be covered in a specific consumer information standard for food within consumer protection legislation rather than in the Code [R41].

The modes of intervention are to be mandatory for food safety and new technologies (for a period of 30 years after their introduction into the human food supply chain) [R28], while there would be a mixture of mandatory and co-regulation requirements for preventative health. Consumer values issues would require self-regulation; however, in the case of market failure, ie country of origin [40, 41] or the failure of self-regulation [39], more prescriptive forms of intervention would be implemented.

The role of government in food labelling
The role of government was defined as ensuring that labelling policies and provisions guarantee food safety, especially with respect to new technologies; encouraging healthy eating and population health; and reinforcing industry self-regulation in the field of consumer values.

The key factor is responsive intervention that requires coordination across portfolios [R4, 21, 23, 41, 59] and jurisdictions [R3, 57, 58]. More prescriptive modes of regulation will be warranted if preliminary interventions prove insufficient.

The changing dynamics of food consumption has been acknowledged with a recommendation to broaden the coverage of food labelling laws to include the provision of nutrition information on menus/menu boards in chain food service outlets that have standardised menu items, and on vending machines [R18].

Achieving compliance and enforcement
The review specifies that a labelling standard which has been included in the Code must have the same priority as any other food standard [R3, 6, 7, 57]. This should also be extended to consumer protection agencies regulating consumer values issues [R4, 59]. Labelling standards should clearly convey what is required of industry and written in a way that ensures that they can be enforced should a prosecution occur [R60]. A more versatile range of enforcement provisions was recommended [R58].

While the Panel supports maintenance of the status quo with respect to compliance and prosecution, they also recommend the establishment and full resourcing of a Food Labelling Bureau (the Bureau) to advise Australian and New Zealand ministers on labelling policy [R61], among other duties.

Evaluate existing work on health claims
The Panel recommends a scheme of nutrition- and health-related claims consisting of simple words that may infer health implications [R19], as well as a hierarchy of substantiation of claims and validation through an agreed nutrient profiling system, plus further conditional requirements [R20]. They also recognise that the proposed system needs protection against the dishonest use of trade names and trademarks to imply claims prohibited in the Code [R21].

Not only would government be expected to comply with the same substantiation requirements as industry health claims, they would have to support any health intervention strategies and programs by referencing both the extent of the health problem and the strength of the causal links between the health problem and the messages. These would also have to be part of a multifaceted social campaign [R22, 24]. The introduction of health claims in the food regulatory scheme would need to encompass not only food, but complementary medicines and dietary supplements [R23].

Evaluate front-of-pack labelling
The issue before the Panel with respect to front-of-pack labelling was what form it should take. The Panel favours a multiple traffic lights (MTL) front-of-pack labelling system. Where general or high level health claims are made or equivalent endorsements/trade names/marks appear on the label, the system would be mandatory [R51, 52, 53]; in all other cases, it would be voluntary.
The Panel would also like to extend the system to chain food service outlets across Australia and New Zealand with the MTL system being displayed on menus/menu boards [R54]; however, alcoholic beverages would be exempt from any MTL requirements [R55].

Evaluate current policies, standards and laws
Public Health and Food Safety
The Review recommends the development of a number of codes of practice that provide information pertaining to additives based on agreed medical priority for sensitive consumers [R8, 11], and changes to the declaration of added sugars, added fats and added vegetable oils [R12]. They want several changes to the Nutrition Information Panel, including the possible explicit inclusion of trans fatty acids (above a threshold) [R13], the inclusion of fibre content [R14], clarification of salt content [R15, 16], and some simplification of presentation [R17].

Alcohol was not exempt from consideration by the review, especially as alcohol is included in the Code. Due to growing evidence relating to the short- and long-term adverse health effects of alcohol consumption, alcohol labelling changes were considered just as important as any other issues evaluated in the review.

The Panel recommends a mandated warning message about the risks of consuming alcohol while pregnant on a range of products [R25]; energy content on the labels of all alcoholic beverages [R26]; and that drinks comprised of a mixture of alcohol and other beverages comply with all general nutrition food labelling requirements [R27].

New Technologies
The Panel recommends a review of the mandatory labelling of irradiated foods [R34], as well as a standard associated with the introduction of nanotechnology-derived ingredients and products [R35]. They reviewed the various exemptions from genetic modification labelling and endorse the exemption of foods or ingredients that have no altered characteristics or no detectable novel deoxyribonucleic acid (DNA) or protein [R29]. The current exemption for adventitious presence is to stay, but they recommend follow-up and monitoring of any adventitious event [R30], and the provision of adequate laboratories, resources and skills for this and other tasks [R33]. There is no support for the present exemption for flavours [R31]; nor do they support the exclusion of foods from chain food service outlets and vending machines from the requirement to declare genetically modified foods or ingredients [R32].

Consumer Values Issues
This relates to the CoOL labelling with the Panel holding the view that the loophole relating to some primary product exceptions should be closed, and that CoOL should be extended to cover all primary products for retail sale [R40].

The review touches on the continuing public confusion over the ‘Made in Australia’ claim, with the recommendation for the development of an “unambiguous and consumer-friendly Australian-origin claim based on the ingoing weight of the various components of the food, excluding water” [R42].

Presentation
The ability of the recommendations made in the report to make appreciable changes and improvements will depend on the consumer’s ability assimilate the information contained within the label. An important aspect of this is the presentation of the label, in terms of clarity and comprehension [R5, 43]. The label requirements include a prescriptive minimum font style [R44] and a minimum contrast level [R46] for all mandatory information, and the emboldening of warning and advisory statements and of allergens [R47].

Other presentational factors requiring consideration are co-location of standardised mandatory health information [R48] and new information technologies for automated label assessments [R49] and extended product labelling [R56].

Industry responses to Labelling Logic
The Australian Food and Grocery Council (AFGC) and AUSVEG, the national peak vegetable and potato industry body, has generally been supportive of the report; however, each have particular concerns with some of the recommendations.

The AFGC has responded positively to the call for a “single, consistent front of pack labelling system”, the development of a comprehensive Nutrition Policy as part of a broader National Food Policy, and extension of the mandatory Country of Origin labelling requirements to cover all primary food products, as well as the removal of Country of Origin labelling provisions from the Food Standards Code, which now gives sole responsibility to the ACCC.

However, AFGC Chief Executive Kate Carnell said that industry rejected the report’s recommendations 51, 52 and 53 on Traffic Light labelling. Of particular interest was that the report said that there was “no consensus on the best form of labelling” on the front of food products.

“Industry rejects traffic light labelling on the basis that it’s badly understood by consumers and the system has been rejected by countries around the world. The Daily Intake Guide (DIG) is the labelling system preferred by the European Union,” said Ms Carnell.

“Industry is happy to work with Government to discuss delivering the DIG system to support recommendation 50 – to ensure DIG front of pack labels are better understood by consumers,” she added.

Industry will be developing a comprehensive response to the report which will be made available to the Federal Government. They are looking forward to the government’s official response to the report.

AUSVEG believes that the Country of Origin issues have not been examined in sufficient detail to be effective. They have called for a more comprehensive plan that addresses the shortcomings in current regulations and laws.

A range of other stakeholder bodies also commented on the report within days of its release. They included the Australian Medical Association, Public Health Association of Australia, Choice, Obesity Policy Coalition, anti-GM groups such as Gene Ethics and more. Such groups generally supported specific recommendations or considered that issues of concern to them were not fully addressed. Comments have also been offered by FoodLegal (www.foodlegal.com.au).

Australian Food Statistics 2009–10

The recently published Australian Food Statistics 2009–10 prepared by the Food and Agriculture Division of the Australian Government Department of Agriculture Fisheries and Forestry (DAFF) covers the financial year 2009–2010. It contains an Overview by Max Foster and colleagues from ABARES.

There are also some 84 tables of statistics and 26 figures, illustrating the trends and other information presented.

In his foreward, Minister for Agriculture, Fisheries and Forestry Joe Ludwig focused on the importance of global and domestic food security and supply and reiterated the government’s commitment to developing a National Food Plan to enable Australia’s food producers and food industries to portray a much clearer view of the sector as a whole.

He highlighted the good reputation that Australian produce carries given our status as the world’s 14th largest food exporter, and with a significant food surplus of $14.2 billion in 2009–10.

As Australia’s largest manufacturing industry, the food and beverage industry has increased its workforce. Considering the challenges of the global financial crisis, this is a great achievement for the industry.

Mr Ludwig listed the coming challenges to policy makers and the food sector as being climate variability, resource constraints and global competition.

In their overview, ABARES highlighted that Australia’s total consumer expenditure on food and liquor is continuing on its rising trend in 2007–08, increasing by around 6% to around $125 billion compared to $113 billion in 2008–09. The market share of total retailing expenditure for food and liquor expenditure increased slightly (by 1.1%) to 52.5% in 2009–10.

Australia’s total farm and fisheries production ($36.7 billion) decreased in value by 4.4%, with the decrease being attributed to lower farm gate milk prices affecting the value of milk production (down by 14%), as well as lower value of production of crops (down by 15%) and lower grain prices. In contrast, higher world sugar prices increased the value of sugar production by 46% over this period.

The value of Australia’s food exports fell to $24.3b in 2009–10; 13% lower than in 2008–09 ($28.1b), but still slightly up on 2007–08 ($23.4 billion).

The value of Australia’s food imports decreased by 3.1% to $10.1 billion compared to 2008–09. Overall, Australia remains a significant net exporter of food, with an export surplus of $14.2 billion over food imports in 2009–10. The last 18 months or so has caused the past five year average surplus to drop to $16.6 billion (in 2009–10 dollars).

Australian food industry employment
In 2009–10, total employment in food and beverage manufacturing increased by 2% to 226 750. This is 28% higher than in 2000–01, with growth occurring predominantly in the bakery products sector, as well as the meat, dairy food and beverage industries. Employment is lower in grain milling and fruit and vegetable processing.

Employee numbers in the agricultural food sector increased by 2.2% to 324 500 in 2009–10. Increased employment in horticultural and other agricultural industries offset declines in broadacre agricultural industries, ie beef, dairy, grains and sheep.

Australian food processing
The most recent official data at a disaggregated level for the processed food industry is still 2006–07, as reported last year. At this time, the industry’s total sales and service income was $79 billion and industry value added to $19 billion. The food and beverage sector provided around 19% of industry value added, 21% of total sales and services income and around 18% of Australian manufacturing sector employment.

Australian food retailing
Total expenditure on food and liquor in 2009–10 was valued at $125.7 billion, an increase of 5.8%. Food and liquor retailing represented 52.5% of total retailing, compared to 45% 20 years ago.

Supermarkets and grocery expenditure ($75 billion, 64%) has only increased slightly since 2007–08 (63%). Expenditure on food and liquor grew by 3% in 2009–10, slightly below the annual average over the last 20 years of 3.5%. Cafes and restaurant expenditure reached $15 billion (13%) and takeaway food outlets $12 billion (10%).

Australian food trade
In 2009–10, the value of Australian food exports was $3.7 billion lower than the previous year. Contributing to the decline are unprocessed grains (down $1781m), meat (down $1082 million), dairy (down $613 million) and wine (down $305 million). Attributing factors towards the decline are the lower world grain prices and the appreciating Australian dollar. Over 2009–10, the Australian dollar has appreciated by 17% and 14% against the US dollar and most of Australia’s other trade partners respectively, leading to lower export earning as most export contracts use US dollars.

In 2009–10, the value of food exports within the substantially transformed category ($16.4 billion) fell by 9.6%. This category contributed around 67.7% of the total value of Australia’s food exports, a slight increase on 2008–09 (65%). In contrast, the value of exports within the minimally transformed category decreased by 20.7%. The value of elaborately transformed food exports has increased slightly since 2008–09 ($361m vs $350m).

The grains and meat industries continue to be the two largest contributors to growth in Australia’s food export earnings. Meat exports accounted for 26% of the value of food exports in 2009–10, only slightly down from the previous year, while grains accounted for 19%, a drop from 23% in 2008–09.

The value of wine and dairy exports in 2009–10 is the lowest it has been since 2002–03 at $2.18 billion and $2.06 billion respectively. The export value of processed meat was also down by 14.6% to $6.3 billion, as was processed fruit and vegetables by 8.7% to $525 million. These decreases were balanced by increases in the value of sugar exports by 31.5% to $1.8 billion and cereal food and baking by 14.1% to $445 million.

Beer and malt decreased by 9.2% to $406 million, bakery products were up by 6% to $161 million and confectionery fell from $269 million to $259 million.

The decrease in the minimally transformed category was largely driven by lower exports of grains, which were down by around 28% to $4.6b. Other decreases in this category were fish or shellfish which fell by 12.9% to $650 million, while oilseeds were up 2% to $657 million.

Over the past 12 months, Australian food imports have decreased to $10.1 billion, a decrease of 3.1%. However, imports have nearly doubled since 2002–03 ($5996 million). Overall, most of Australia’s imported goods (93%) are substantially transformed products.

In 2009–10, the value of substantially and elaborately transformed food imports declined by 4%; however, the value of minimally transformed food increased by 15%, which was driven by an increase in fruit and nut imports.

Contributors to the growth in imports have been fresh fruit and vegetables (up $45 million), sugar (up $28 million), processed food not elsewhere classified (up $49 million), ham, bacon and smallgoods (up $14 million), spirits (up $8 million), confectionery (up $7 million) and fish or shellfish (up $5 million).

However, some commodities decreased in import value. Oilseeds fell to $36 million (down by 26.5%), oil and fat lost $93 million (down by 16.1%), processed fruit and vegetables fell to $1367 million (by 12.3%) and processed seafood lost $49 million.

Export/import markets
Over the years, Australian food exports have become more concentrated in geographical terms, with the share of the top 15 export destinations increasing to more than 80% in 2009–10, compared with around 67% in the early 1990s.

Whilst Japan continues to be the biggest market for Australian food exports in 2009–10 with around 17% value share, Indonesia is an important emerging market with 8.5% of the total value of food exports in 2009–10. This equates to a fourfold increase since 1990–91. Other Asian markets such as China, Thailand and the Philippines have also become more predominant importers. The share of exports going to the Republic of Korea, New Zealand, Singapore, Hong Kong and the United Kingdom has increased over the period.

The ASEAN group of countries (Burma, Brunei Darussalum, Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand and Vietnam) are rapidly growing in importance as destinations for Australian food exports, although a slight decline in the value share occurred in 2009–10 (down to 20%).

New Zealand remains the major source of Australia’s food imports, accounting for almost $1.88 billion of the total value (18.6%). The ASEAN–Australia–New Zealand Free Agreement (AANZFTA) came into force in early 2010 with a view to increased competitiveness of Australian food exports to the region, especially for dairy products.

Australia is the world’s 14th largest food exporter with a 2.2% share of trade value. USA is still ranked first with 10.6% of business. Australia is 25th on the importer list, maintaining a 0.9% share over the last 12 months.

This report is based on the Australian Food Statistics 2009–10 which is available in from www.daff.gov.au/agriculture-food/food/publications/afs/australian_food_statistics_2009.

Australian food industry and the GFC

Recent research from Leatherhead Food Research (LFR, UK) Global Food Markets database suggests that the key food sectors in Australia are weathering the global recession well. Although there are signs that consumers have begun to economise during the slowdown, many sectors reported strong growth in 2008, with 2009 sales estimates also positive. This is in part due to the fact that total consumer expenditure in Australia has not dropped at the same levels as other major economies. Real private consumption expenditure in Australia grew 2.2% in 2008, with an OECD forecast of 1.3% in 2009 and 1.5% in 2010 (compared to +0.3%, -1.3% and -0.2% respectively for the Euro area).

Baby food sales, for example, rose 8.8% in 2008 with 2.8% growth forecast for 2009, reflecting a trend towards higher quality and more expensive products, as well as increased costs of raw materials being passed on by manufacturers.

Chocolate sales were up 6.1% in 2008 with 3.9% growth forecast for 2009. Much of the recent market growth can be attributed to the increasing popularity of premium chocolate, especially in sectors such as boxed and bite-sized chocolate assortments. In addition, sales of everyday blocks and countline products have also held firm. Sugar confectionery has also been a buoyant sector, up 5.8% in 2008 and an anticipated 3.7% in 2009. Much of the recent growth can be attributed to growing consumer interest in healthier varieties of sweets, with sugar free products featuring strongly. Medicated confectionery has also performed well of late.

Sales of coffee grew 7.5% in 2008 and are 25% higher than in 2005, due to a trend towards specialty instant and roast coffees. A further rise in value of 5.3% was predicted for 2009.

In ice-cream, sales of premium and indulgence products held firm in 2008, despite the squeeze on spending power during the downturn. Sales through grocery channels were up 5.9% in 2008, with a 4.8% increase estimated for 2009.

Compared to European standards, per capita consumption of bottled water is relatively low in Australia at around 25 L, but consumption levels have been growing and sales in value rose 12.0% in 2008 with an increase of 8.3% predicted for 2009. Sales of more expensive smaller formats for children along with the success of vitaminised products targeted at adults have contributed to growth.

The sauces market is one sector that has benefited from the tendency for consumers to economise and prepare meals from scratch at home in place of dining out, as convenience and ease of use have become a key selling point. Overall sales of sauces in 2008 reached $998 million, up 4.0% on the previous year, with 3.1% growth forecast for 2009. Asian influences have been a key trend in terms of flavour development. For example, soups based on traditional Far East Asian recipes as well as Latin tastes, which are spicy and often incorporate beans and lentils, have proved successful. In recent years, Asian savoury snack foods have become more popular, although their level of sales remains modest. Australian consumers have developed a taste for ethnic cuisine, with Indian, south-east Asian, Mediterranean and Latin recipes all proving popular and currently accounting for 75% of ready meal sales.

Since 2007, considerable merger and consolidation activity has taken place in the marketplace as the industry moves into a phase of maturity and as many domestic and foreign companies alike are looking to take advantage of opportunities in the Asia-Pacific region as a whole. As a result, several key sectors have become increasingly dominated by a handful of players as shown in the following table.

Major deals in recent years have included:

• Leading dairy and juice company National Foods was acquired by Japan’s Kirin Holdings in late 2007, and itself purchased the Dairy Farmers Co-operative for $910 million in 2008. Via its Australian affiliate Lion Nathan, Kirin had also tried to take over Coca-Cola Amatil, the anchor bottler for Coca-Cola in Australia, but withdrew its bid in 2009.
• In the savoury snacks market, Snack Brands Australia now takes second place (behind PepsiCo) with an 18% share, having acquired Campbell’s Arnott operation in May 2008. Snack Brands Australia is itself majority owned by Real McCoy Snackfood Company, a locally owned snackfoods company. The transaction included the Cheezels, Thins, Tasty Jacks, French Fries and Kettle Chips brands, as well as the transfer of two snack factories in Australia.
• In May 2009, Cadbury Schweppes’ Australian drinks operations (the chief bottler and distributor of PepsiCo brands in Australia) were acquired by Asahi Breweries of Japan for $1.17 billion.

Own label is not as well developed as in many European countries but has been a growing feature of the market. Its share in value terms is highest in butter (39%), milk (38%), cooking oils (27%), bread and morning goods (24%), cheese (20%), cakes (18%), dried pasta (13%), sugar confectionery (13%) and savoury snacks (12%).

Despite the market’s increasing maturity, in many sectors a period of further growth is expected, driven by rising demand for healthier and more convenient product formats. Increasing manufacturing costs however will push value sales ahead of volume gains. Further increases in value sales are expected to be highest in mineral water, coffee and ice-cream. Consumption of mineral water will continue to grow as per capita rates start to catch up on levels in the western world. Growth in coffee is expected, with market value likely to approach $1 billion by 2012, due to the strong performance of premium instant and roast products. Ice-cream sales (through grocery channels), also influenced by premium varieties, will grow at a similar amount and will also surpass the A$1 billion sales mark by 2012. Predicted growth in the major categories is shown in the figure below.

Further information on LFR Global Food Markets reports is available from
www.leatherheadfood.com/global-Food-markets.