As prices rise, detrimental food policies risk worsening consumer habits

Across Europe, prices are soaring as inflation bites. France is experiencing its highest levels of inflation since the mid-1990s, and the situation isn’t much better elsewhere on the continent. In May, inflation in consumer prices within the Eurozone hit a record 8.1%, with peaks as high as 20% in Estonia.

While the European Central Bank (ECB) has already committed to taking action to fight inflation by hiking interest rates, the latest projections suggest prices are unlikely to stop rising until 2023. For families around Europe, higher food bills have already started impacting choices at the supermarket, with some opting for cheaper calories to stretch their narrowing budgets. During this time of economic distress, well-intentioned government policies aimed at encouraging people to embrace healthier diets must therefore be carefully scrutinised to ensure they do not to lead consumers to make even worse food choices.

What’s left in the shopping basket?

Globally, the effects of the war in Ukraine and rising fuel prices are causing widespread concerns over food security. And while Europe is not facing widespread shortages, consumers are feeling the sting of increasing food costs and have already starting shifting their shopping habits. According to the latest European Consumer Pulse Survey by McKinsey, 94% of respondents reported an increase in their grocery spend, with 44% listing rising prices as their current top concern.

As a result, a majority (68%) of European consumers have changed their shopping habits: around half of all respondents stating they had, or would soon, switch to private-label foods to stretch their monthly budget, while 19% of consumers stated they would start doing their weekly food shop at discount stores. Others are instead taking more drastic measures, with a survey by the Office of National Statistics (ONS) in the UK revealing that two in five people intend to buy less food to get by.

Rising prices are not, however, the only force driving recent changes in consumer behaviour. Just as important as economics are the growing number of policy interventions aimed at encouraging people to adopt a healthier diet and lifestyle. Such measures have become all the more important after two years of pandemic overeating and lockdown-induced sedentary lifestyles, which have contributed to worsening obesity rates that already affected 1 in 5 adults in the European Union.

Governments of all stripes have therefore renewed their efforts to encourage consumers to make healthier food purchases. An especially popular way of doing so has been through the use of ‘nudges’, which – unlike other more ‘coercive’ measures – steer people in a particular direction while giving them the freedom to make the final choice. For instance, the UK recently introduced a 9pm embargo on junk food advertising, while Spain has resorted to an outright ban in order to nudge children away from buying – or asking for – high sugar products.

Good intensions, unintended consequences

Few would argue against the need to steer the public, and especially children, away from consuming inordinate quantities of junk food and choosing healthier options. Sometimes, however, well-meaning reforms can fall wide of the mark and, rather than encouraging better consumer choices, actually end up having the opposite effect.

The European Commission’s decision to agree on a single front-of-package labelling (FOPL) system by the end of this year, for instance, appears at first glance to be a sensible measure that could inform consumers and encourage them to make healthier food choices. However, some of the proposed systems cause more problems than they resolve. The so-called Nutri-score system, put forward by France, has been accused of oversimplifying nutritional information by giving food items a grade from A to E on a single traffic-light coloured label. According to critics across Europe, Nutri-score risks being counterproductive, actually pushing unsuspecting consumers to make less healthy decisions.

Because Nutri-score fails to take into account a number of important nutritional considerations including the fact that some types of fat actually have health benefits, as well as the normal portion size for a given product, a consumer could easily be misled into believing, for example, that the individually sliced packet of processed cheese marked ‘C’ is far healthier than the Bleu d’Auvergne or Roquefort marked ‘E’ sitting right next to it. In a similar vein, consumers may be unaware that some products have been reformulated by big brands specifically to get a better Nutri-score grade. This is the case, for example, with Nesquik chocolate cereals, which now receive an “A” score despite ingredients including sugar, cocoa, glucose syrup, and palm oil. Rather than pushing people to choose healthier products, the Nutri-score label seems more likely to lead consumers astray, nudging them towards industrially reformulated products rather than single-ingredient foodstuffs.

Another case of well-meaning policy intervention, but whose unexpected adverse consequences are likely to outweigh its benefits, can be found in the UK’s decision to introduce calorie counts on restaurant menus. While seemingly a valid strategy to encourage consumers not to overindulge, experts such as Prof. Stuart Flint have correctly pointed out that “solely focusing on calories” may also be misleading, as the lower calorie meal is not always the healthiest. Moreover, the policy has come under heavy scrutiny by advocates concerned with eating disorders, who point out that calorie counts contribute to fuelling people’s anxieties over food.

The big lesson to be drawn from these policies is that, in order to get consumers to make better and healthier food choices, good intentions are not enough. At a time of unprecedented economic turmoil, which is already influencing consumer choices in undesirable ways, it is crucial for governments not to pour fuel on the fire by adopting measures that may cause people to adopt even worse eating behaviours. It is therefore perhaps more important than ever to follow the precautionary principle and be led by evidence, even if it means rethinking major announcements or policy interventions.

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