EU labelling: The facts behind the figures

22 November 2011 (Last Updated November 22nd, 2011 18:30)

New EU labelling laws are forcing companies to look more closely at the accuracy of product information. Chris Lo looks at how standardising European labelling regulations will affect packaging companies, food producers and retailers.

EU labelling: The facts behind the figures

With the EU's approval of new legislation concerning nutrition and country-of-origin (COO) information this summer, the long road to regulation has begun. The EU Council came to an agreement with the European Parliament after the legislation's second-reading at the end of September 2011, which means the new regulations will likely be published in the Official Journal of the EU by the end of 2011, making them official.

The new legislation lays down uniform rules and regulations governing the display of nutrition and other information for food products in the EU. Pre-packaged food will have to display dietary information on quantities of fat, saturates, carbohydrates, protein, sugars and salt, all in font no smaller than 1.2mm tall.

The legislation also clamps down on misleading information and expands COO requirements to include fresh lamb, pork and poultry, as well as beef.

Clearly, these new requirements are going to impact packaging companies, retailers and food producers across the EU's member states, especially in countries where current regulation may be lax. But plenty of time remains for the private sector to ensure compliance - although the legislation will be officially sanctioned by the end of 2011, it will take between three and five additional years for all its various clauses to come into force.

Before the rules come into full force by 2017, food retailers and their packaging partners need to consider more than just presenting nutritional and COO information on their products. Companies will have to look deeper into their supply chains and develop well-organised validation processes to ensure the figures quoted on their food packaging are accurate.

Verification: an industry blindspot?

"West notes there is a 'proven correlation' between the amount of information offered to consumers on packaging and levels of sales."

With the co-ordination of food producers, suppliers, packaging design and printing firms, launching a food product is a complex and costly exercise for brands and retailers producing their own private label products.

Getting information on ingredients, nutrition or COO wrong can throw a spanner into an extremely expensive process, and these kinds of pricey errors will only become more important when the EU legislation comes into force, as new rules also ramp up inspections on the authenticity of information.

Trace One, an international provider of cloud-based software that allows retailers, manufacturers and suppliers to collaborate on product development, is predicting a potential blindspot in the area of validation, even in countries with advanced national labelling requirements already in place, such as the UK.

Trace One's vice president for northern Europe Amina West elaborates. "There was a study done by Defra [UK Department for Environment, Food and Rural Affairs] earlier this year which looked at about 500 meat and dairy products, and they found that 30% of the packaging and labelling they inspected didn't conform to certain standards. So there's still a lot of room for improvement," she said.

"Getting it right first time is what we're saying needs to happen, and it's going to become more and more important to be able to do that."

Increasingly, says West, retailers and packaging companies are replacing traditional paper or spreadsheet-based validation processes with online systems, as well as relying on web technologies to communicate information to customers, often through the use of quick response (QR) codes on packaging.

"We're seeing it go that way already. Most of the major retailers and the major branded products - L'Oreal, Coca-Cola, Unilever - have all got quite detailed online systems now to keep the consumer informed. Ultimately, the consumer wants to know if they can trust a brand or retailer. Online is one way in which we'll get information readily available and more of it."

Europe's stricter labelling laws: good or bad for business?

Now the new labelling regulations have passed through their second reading, it seems unlikely they will experience any disruption or derailment before being signed into law, implemented and enforced over the next few years.

"There is still debate as to whether the industry will suffer or benefit from stricter labelling checks."

But there is still debate in both political and commercial circles as to whether the industry will suffer or benefit from stricter labelling checks.

MEP Renate Sommer, a key player in moving the legislation through the European Parliament, believes the new rules will benefit both the industry and consumers through uniformity and simplicity. "The new rules are supposed to provide more and better information to consumers so they can make informed choices when buying. But it is more than that: the food industry should benefit too," she said in July 2011.

"There should be more legal certainty, less bureaucracy and better legislation in general...this is very important for SMEs."

But not everyone agrees. Italian chocolate products producer Ferrero has been outspoken in its concerns that high-fat products like its Nutella chocolate spread would be demonised under the new regulations, and several high-profile Italian politicians have taken a similarly dim view of the new requirements.

In the UK, conservative peer Baroness Oppenheim-Barnes last month criticised the EU regulations as "futile, pathetic and unenforceable" and has been arguing for national regulatory regimes (although hers is not a view that seems to have garnered much support in the UK's coalition government).

New considerations for industry

"Companies will have to look deeper into their supply chains and develop well-organised validation processes."

Beyond the political rhetoric, it is clear the new regulations will have a decided effect on the packaging and labelling landscape in Europe. The tighter controls around country-of-origin labelling will require more producers and retailers to have an in-depth knowledge of their entire supply chain for particular products, from farm to fork.

In cases where meat or other products are imported from outside the EU, it will also require a new level of cooperation between EU importers and exporters worldwide. If international suppliers don't provide proper information to their EU customers once the regulations come into play, they "run the risk of losing that business," said West.

"The private label [products developed by retailers in-house] market is growing and I think it will continue to do so, and retailers, particularly in the UK, are on the ball with making sure that ingredients, country of origin and other information is now becoming a standard requirement when they engage with suppliers."

The food production and packaging industries in general, and retailers in particular, are also considering the effect of packaging information on sales. Indeed, West notes there is a "proven correlation" between the amount of information offered to consumers on packaging and the level of sales or recognition achieved by a product or brand.

Market data from the private label sector conducted by Trace One and Planet Retail appears to support this assertion, with research revealing that countries with higher packaging information requirements like Germany, the Netherlands and the UK, are experiencing higher levels of private label market penetration than those with fewer requirements, like Turkey, Italy and the Czech Republic.

Although the EU's new labelling requirements will likely force companies to engage more with their complex supply chains to prove their packaging information is correct as well as correctly displayed, there is also potential for retailers to turn the regulations to their advantage as a means of making their products stand out.

This is why an increasing number of companies are now experimenting with innovative new ways to inform customers, like Asda's recent initiative to install webcams in their hatcheries where their hens were laying. The introduction of uniform requirements across the continent could potentially bring the packaging, food production and retail worlds closer together through the need to work together to innovate, verify and comply.