Uncertainty around UK health regulation is discouraging food and drink manufacturers from investing in healthier product innovation, according to new research from the Food and Drink Federation and consultancy Argon & Co.

The study found that 69 per cent of respondents said greater regulatory certainty was important to their ability to invest further in healthier products, as manufacturers grapple with the cost and complexity of reformulation.

The FDF said frequent changes to health policy, differences in regulation across the UK and shifting regulatory benchmarks were making it harder for businesses to commit to multi-year investment programmes.

It is calling on the government to provide between five and 10 years of regulatory stability and to pause proposed changes to the Nutrient Profiling Model, which underpins restrictions on advertising and promoting certain food and drink products.

The research found reformulation projects at large manufacturers can cost as much as £5m, taking into account areas such as ingredients, testing, staff time, marketing and production downtime.

One business involved in the research said changing packaging following a reformulation could alone cost up to £500,000 because of packaging and artwork write-offs.

The commercial risks are also significant. Some 69 per cent of respondents had experienced a healthier product failing to reach launch or later being delisted by retailers, while 63 per cent said reformulated products had generated lower-than-expected sales.

The FDF warned that the combination of high costs and regulatory uncertainty was leading some manufacturers to direct innovation investment towards markets outside the UK.

However, the report also found continued appetite across the sector for health-focused product development.

Nearly two-thirds of businesses surveyed undertake at least six healthier product innovation projects a year, while 81 per cent have reformulated products and 50 per cent have increased innovation in response to regulation.

The FDF said products made by its members now contain 18 per cent less salt, 19 per cent less sugar and 17 per cent fewer calories than in 2021.

FDF chief executive Karen Betts said the sector’s investment in healthier products risked being undermined by regulatory changes introduced shortly after businesses had adapted to previous rules.

“Companies need regulation to stay in place for at least five years if they are going to invest in new products to meet it,” she said.

Betts added that government and industry shared the goal of encouraging healthier choices, but argued that greater policy stability would give manufacturers more confidence to invest.

James Watson, partner and head of UK manufacturing at Argon & Co, said the cost and risk of reformulation was placing additional pressure on suppliers following several challenging years.

He called for a broader review of the system, including greater consumer education and incentives to encourage manufacturers to invest in healthier products.

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