Breakfast giant Kellogg's has lost a High Court challenge to the UK government over incoming food regulations in the UK that will cost the manufacturer an estimated millions of pounds in lost sales.
Coco Pops and the All-Bran manufacturer have filed a lawsuit against the Department of Health and Social Care (DHSC) over new rules that will take effect in October.
The regulations will restrict where certain types of food are allowed to appear in supermarkets or on their websites, and will also ban multi-buy promotions of foods that are considered high in fat, sugar or salt (HFSS).
Marketing of HFSS food in stores will be restricted when the rules come into force, which means that they will not be allowed to be displayed in high-profile places such as checkouts, store entrances and walkways.
At a hearing in April, Kellogg's claimed that the rules are illegal because the nutritional value of breakfast cereals will be judged on their dry weight as sold, rather than how they are eaten – usually with milk.
Manufacturer's lawyer Tom Hickman QC said: “It is obvious that breakfast cereals are not eaten dry. They are not designed to be eaten that way, they are not marketed to be eaten that way and they are not actually eaten that way.”
But in a verdict on Monday, Justice Linden rejected the demand, and found that the question of how grain is consumed and should be measured had been considered and resolved in consultation.
“In my view, the true position is that the fact that none of the breakfast cereal producers raised the issue in their detailed responses during the consultation period of more than one year tends to support the notion that ‘sold versus consumed' issue had long been resolved, was well understood and was accepted in the industry, he said.
Mr Justice Linden said there was no dispute that breakfast cereals could be part of a healthy diet.
He continued: “But the argument that there are nutritional benefits to consuming a given breakfast cereal does not affect the point that if it contains excess fat, sugar or salt, that property of the product is harmful to a child's health.
“Even less is it an argument against trying to encourage, for health-related reasons, the promotion and consumption of breakfast cereals that contain less fat, sugar or salt.
“Mixing breakfast cereals that are rich in sugar, for example, with milk does not change the fact that it is high in sugar.”
The judge said that 54.7% of Kellogg's current grain will be classified as less healthy according to the new rules.
He added that 30% of Kellogg's HFSS products are sold through site promotions – agreements with resellers to place products on high-profile sites, as well as promotions on websites.
Kellogg's UK revenue and channel director previously estimated that 2.5 million kilos of sales would be lost as a result of restrictions on these site promotions – which is estimated at around £ 5 million in annual profits, the judge said.
Mr Justice Linden said there was “irony” in this evidence, adding “the negative impact on Kellogg's that he predicted directly correlates with what the government is trying to achieve”.
During the hearing, the judge was told that 100 g of Frosties contains 37 g of sugar.
“The suggestion that Frosties should not be considered a less healthy product due to the nutritional value of the milk with which they can be consumed is surprising,” wrote Justice Linden.
Kellogg's UK CEO Chris Silcock said the company was “disappointed” with the verdict.
He continued: “Although we are disappointed with this ruling, we respect the decisions of the courts and do not intend to appeal. We still believe that it is important that cereals are measured in a way that reflects how most people eat them – with milk.
“We also remain concerned about how the government introduced these rules – which, in our view, were without proper parliamentary scrutiny.” By limiting the placement of goods in supermarkets, people are faced with fewer choices and potentially higher prices. That is why, in the midst of a cost-of-living crisis, we strongly urge the government to reconsider these rules and put the consumer first. ”
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