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Prevention: Tax and pricing

New approaches: restrictions on price promotions

Last updated 29-08-2019

Evidence from the United Kingdom shows that high-sugar products are more likely to be promoted than other food and drink items. Price promotions lead people to buy more, rather than buy the same amount at a cheaper price. The UK Government has committed to a legislative ban on price promotions such as multi-buys and unlimited refills, for unhealthy food and drink.

Key Evidence

01

Price promotions typically take one of three forms

02

Price promotions encourage purchases of unhealthy food and drink

03

The UK and Scottish Governments are planning to restrict price promotions of unhealthy food and drink

Price promotions are now a common feature of grocery shopping and generate a large proportion of household spending on food and drink.1 Public Health England has defined price promotions as special offers giving a discount on the usual selling price, which are typically restricted to a specific range, product or pack format. These typically take one of three forms:

  • A temporary price reduction on a particular product before the price returns to normal
  • A ‘multi-buy’, in which shoppers can purchase more items for a discount (for example, ‘buy three for $2’ or ‘buy one get one free’)
  • Offering extra free, in which the manufacturer creates a larger pack size and states that a proportion of the product is free (for example a pack label stating, ‘50% extra free’).1

About 40% of products sold in Australian supermarkets are on a price promotion, according to industry data, making Australia “one of the most highly [price] promoted countries in the world”.2 A study of price promotions in a major Australian supermarket chain found that discretionary (junk) foods were discounted twice as often on average as core (healthy) foods.3 Using weekly online price data gathered between April 2017 and April 2018, researchers found that 15% of core foods and 29% of discretionary foods were price promoted in any given week. Discounts were largest for discretionary foods (-26%) compared to core foods (-15%).

A major review of household purchases by 30,000 British shoppers analysed the impact of price promotions on the purchase of high-sugar food and drinks between 2015 and 2017.1 The review found that high-sugar food and drink items were more likely to be promoted, and more heavily promoted, than other food and drink items. It found that all shoppers took advantage of price promotions, not just low-income shoppers. Promotions led people to buy more within a particular product category, rather than simply buying the same amount at a cheaper price. A flow-on effect saw increased household spending on take-home food and drink overall. In a separate study of post-purchase consumption behaviour, stockpiling a product as a result of a promotion (rather than anticipated future need) was found to significantly increase average daily consumption of food and drink.4

Researchers have discussed the ways that point-of-sale marketing, including price promotions and product placement, is used to capitalise on people’s vulnerabilities and encourage purchases of unhealthy food and drink.5 This can be done by overwhelming the brain’s cognitive system, which operates slowly to solve complex problems that require deliberate choice and concentration. The cognitive system has limited capacity and when it is fatigued, non-conscious processes take over. This non-conscious system operates automatically and quickly and favours short-term benefits and superficial characteristics such as product appearance, price, positioning and convenience.5

In its childhood obesity plan released in June 2018, the UK Government committed to a legislative ban on price promotions such as multi-buys and unlimited refills of unhealthy food and drinks, which served to “encourage bulk buying and over-consumption of unhealthy products”.6 It also committed to ban the promotion of unhealthy food and drink at prominent locations in stores such as checkouts, end of aisles and store entrances. At the time of writing, the UK Government was consulting stakeholders on the best way to implement these policies.6

The Scottish Government also has a plan to restrict multi-buys and unlimited refills of unhealthy food and drinks, as detailed in its October 2018 consultation paper on Reducing Health Harms of Foods High in Fat, Sugar or Salts. Like the UK Government, the Scottish Government also proposes a ban on promotion of unhealthy food and drink through placement at prominent locations in stores.7 Any future UK legislation would likely apply to Scotland, although Scotland could have protections that do not apply to the rest of the UK if its legislation is enacted first.

References

1. Public Health England. An analysis of the role of price promotions on the household purchases of food and drinks high in sugar. London, England 2015. Available from: https://assets.publishing.service.gov.uk/
2. Zeviani R. (2018). Are we really getting value from our promotions? Nielsen.com.au. Available from: https://www.nielsen.com/au/en/...
3. Riesenberg D, Backholer K, et al. (2019). Price Promotions by Food Category and Product Healthiness in an Australian Supermarket Chain, 2017–2018. American Journal of Public Health: e1-e6.
4. Chandon P and Wansink B. When are Stockpiled Products Consumed Faster? A Convenience-Salience Framework of Post-purchase Consumption Incidence and Quantity. Journal of Marketing Research, 2002; 39(3):321-335.
5. Cohen DA and Lesser LI. Obesity prevention at the point of purchase. Obesity reviews : an official journal of the International Association for the Study of Obesity, 2016; 17(5):389-396.
6. UK Government. Childhood obesity: a plan for action - Chapter 2. 2016. Available from: https://www.gov.uk/
7. Scottish Government. Reducing Health Harms of Foods High in Fat, Sugar or Salt - consultation paper. 2018. Available from: https://www.gov.scot/