1 Type: Original Article

2 Drawing on Strategic Management Approaches to Inform Nutrition Policy Design: An 3 Applied Policy Analysis for Salt Reduction in Packaged Foods

4 Abstract

5 Background: Nutrition policies to improve the food environment frequently rely on voluntary 6 business action for implementation, many have had mixed success. The aims of this study were 7 to identify key food system drivers influencing the Australian packaged food sector and analyse 8 how these might impact the willingness of food companies to voluntarily reduce salt in 9 packaged foods.

10 Methods: Business methods formed the basis of this retrospective applied policy analysis of 11 voluntary salt reduction for the period 2013-2016 where the focal policy was the Australian 12 Food and Health Dialogue (2009-2015). The analytical framework included political-legal, 13 economic, social, technological (PEST) external drivers of the food system, and Porter’s Five 14 Forces for the competitive drivers of the food system. Documentary data identifying food 15 system drivers affecting the Australian packaged food sector (comprised of the food processing 16 and supermarket industries) were identified through a comprehensive search of the grey and 17 academic literatures.

18 Results: The interplay between external and competitive food system drivers created an 19 environment in which voluntary salt reduction was found to be an uneasy fit. A high cost of 20 doing business, soft growth, intense competition, asymmetry of power in favour of 21 supermarkets, and marginal consumer interest in less salty food were found likely to create 22 commercial disincentives to invest in voluntary salt reduction above more pressing commercial 23 imperatives. Analysis of food manufacturing industries highlighted the highly contextual 24 nature of food system drivers. Opportunities for nutrition policy included: support for ‘shared 25 value’ in economic discourse; and, leveraging investor, supermarket, and the largely unrealised 26 bargaining power of consumers.

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1 Conclusion: Business frameworks can provide meaningful insights for nutrition policy on how 2 food system drivers can thwart policy goals. Our analysis highlighted areas to incentivise 3 voluntary action and illustrated the importance of political-legal, economic and consumer 4 strategies for salt reduction. 5

6 Keywords: Salt Reduction; Food System; Food System Drivers; External Environment, 7 Competition 8

9 Key Messages

10 Implications for policy makers 11 • There is a growing awareness of the importance to better understand food system drivers 12 and their interactions in nutrition policy. Analysis of these drivers can serve to highlight 13 how food system drivers could be harnessed to influence business behaviour in support of 14 effective nutrition policy. 15 • There is an opportunity for nutrition policy makers to leverage off consumer health trends 16 in the design of nutrition policy. 17 • Competitive advantage requires a business to provide products that meet consumer needs 18 better than their competitors, incorporating a citizen science approach could strengthen 19 policy makers understanding of the public perspective of the food environment. 20 • To lessen the threat of product substitution with unhealthier alternatives and promote a 21 level playing field for business, policy makers could work towards nutrition policy 22 coherence across the packaged food and food service sectors. 23

24 Implications for public 25 Food businesses are the biggest investor in the food system and the decisions they make on 26 product quality, price, promotion and where products are sold influences what, where, why and 27 how we buy, prepare and eat food. Many packaged foods contain excess salt, sugar and fat. 28 Different business decisions about the foods we eat have the potential to help the public to be 29 healthier. This research has highlighted the tremendous unrealised bargaining power of the

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1 public. Unleashing this power could be achieved through every-day purchase decisions and by 2 participating in initiatives to improve the food environment. These initiatives could include 3 applying pressure to incorporate nutrition considerations into investment decision making, and 4 participation in citizen science approaches to explore the public experience of their food 5 environment to help design nutrition policy. 6

7 Background 8 Diet is a leading contributor to the growing global burden of non-communicable disease 9 (NCD), which includes diabetes, some cancers, and cardiovascular disease (CVD).1,2 These 10 diseases are largely attributable to the unfavourable metabolic effects from foods and drinks 11 containing excess saturated fats, sugar, energy, and salt.3 Governments globally have 12 committed to taking action on diets and nutrition. Nutrition is inextricably linked to countries 13 achieving the Sustainable Development Goals (SDGs); goals which are universal, apply to all 14 countries and were officially adopted by 193 Member States of the United Nations.4 SDG 3 is 15 to ensure healthy lives and promote well-being for all at all ages and target 3.4 is to reduce 16 premature mortality from NCD by one third by 2030.4 One of many strategies to achieve this 17 is improving nutrition by creating healthier food environments. However, unhealthy food 18 environments persist in all countries, characterised by the promotion, marketing and easy 19 availability and affordability of foods containing levels of salt, fat, and sugar considered too 20 high for a healthy diet.5,6 21 22 Nutrition policies aim to enable healthier choices through the creation of healthier food 23 environments in areas such as nutrition labelling, responsible marketing, and product quality 24 (e.g. product safety and formulation/reformulation).7 For the purposes of this paper we define 25 policy as a broad statement of goals, objectives and a way to create a framework for policy 26 action.8 Many public policies are predicated on the voluntary actions of business for 27 implementation9 – regarded as providing some opportunities but carrying more risk10 and less 28 effective than mandated approaches.11 Industry influence and/or led rules and standards, and 29 weak public-partnerships are often cited reasons for poor policy outcome.10,12-17 For example, 30 the comprehensive United Kingdom salt reduction campaign was widely regarded as the 31 benchmark other countries sought to emulate, but lost momentum when the responsibility for 32 salt reduction passed to food companies with the Responsibility Deal in 2011.18 Australia

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1 adopted a similar policy mechanism with the Australian Food and Health Dialogue 2 (Dialogue)19 (i.e. food companies voluntarily agreed to reduce added salt). 3 4 The Dialogue19 was established in 2009, led by the Department of Health it also included 5 members from non-government organisations, government agencies, and the private sector. 6 Whilst there were concurrent long-standing non-governmental advocacy campaigns,20 7 domestic21 and global22,23 corporate initiatives, the Dialogue was the focal point for salt 8 reduction during this study period (2013-2016). Salt reduction targets were in place for selected 9 packaged products from nine food categories, chosen because of their sizeable contribution to 10 salt intake from packaged food in Australia. The targets for breads, ready-to-eat breakfast 11 cereals, and processed meats were to be achieved by December 2013; simmer sauces, soups 12 and savoury pies by December 2014; potato/corn/extruded snacks, and savoury crackers by 13 December 2015; and cheese by December 2017.19 (See Supplementary File 1 for further detail 14 of the Dialogue salt reduction targets). The Dialogue had modest success in achieving some of 15 the targets16,17,24 and after a protracted period of inactivity it was replaced in November 2015 16 by the currently active Healthy Food Partnership.25 New salt reduction targets were proposed 17 by the Healthy Food Partnership in 2018 for implementation starting July 2020.26 It remains to 18 be seen if these will be implemented more successfully than those of the Dialogue. 19 20 This study takes a new approach to analysing why nutrition policies predicated on voluntary 21 action have largely failed to make meaningful improvements in food environments. It focuses 22 on the external political-legal, economic, social, technological, and competitive food system 23 drivers and how they may affect business behaviour to act on voluntary nutrition policies in 24 Australia. Understanding food system drivers and how they function is increasingly regarded 25 as a necessary first step towards more effective nutrition policy.27 In this study the food system 26 is described as the elements (environment, people, inputs, processes, infrastructures, 27 institutions) and activities that relate to the production, processing, distribution, preparation 28 and consumption of food, and the output of these, including the socio-economic and 29 environmental outcomes.28 As would be expected in a complex, adaptive system involving 30 interactions by many actors and institutions,29 food systems are profoundly shaped by many 31 drivers depending on the boundaries of the system.27 Understanding these drivers is acutely 32 pressing for nutrition policies premised on business goodwill for successful implementation, 33 and is thus especially pertinent for voluntary reformulation, such as salt reduction.

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1 In contrast to public health, business has long-recognised the importance of identifying and 2 assessing the impact of ‘drivers of their system’. Mindful of a particular ‘sector’ – large 3 segments of the economy in which a large number of companies operate – and ‘industry’ – 4 where a specific group of companies or businesses operate in a similar area30- an external and 5 competitive analysis seeks to identify and assess the business implications of the current and 6 predicted external political-legal, economic, social, technological (PEST)31 and competitive 7 drivers32 to inform business decision making.33 While understanding competitive patterns 8 within a sector (e.g. Australian packaged food sector that in this study incorporates food 9 processing/manufacturing and retailing) or industry (e.g. supermarket industry, cheese food 10 manufacturing industry) may seem foreign to public health actors, a comprehensive assessment 11 of competitive strength can highlight the distribution of power, as well as attractiveness to 12 invest in, and the potential implications for, the innovation of healthier products.31 As the 13 biggest investors in the food system,34 the decisions made by business on the availability, price, 14 product quality, promotion and marketing of food heavily influence the food environment.35,36 15 Voluntary action to implement nutrition policy is just one of the many considerations for a 16 business alongside meeting their on-going economic and legal obligations. To the best of our 17 knowledge, few studies have taken an interdisciplinary approach to identifying external and 18 competitive food system drivers and assessing how they might function to mediate the 19 implementation of nutrition policy that is voluntary such as the Dialogue. 20 21 In this study, we adapt established frameworks from strategic management to analyse the 22 external and competitive drivers of food industry decision-making, using the case study of 23 voluntary salt reduction in Australia in which the focal policy was the Dialogue.19 Salt 24 reduction is a global health policy priority, due to the dose response relationship between salt 25 intake and blood pressure in adults, which is a leading risk factor for CVD.37 A 30% relative 26 reduction in mean population intake by 2025 was endorsed by Member States of the World 27 Health Organization, including Australia.38 Despite being a key policy intervention to prevent 28 CVD, salt reduction of the scale and magnitude needed to save lives remains challenging.39,40 29 The aims of this study were to identify the key food system drivers influencing the Australian 30 packaged food sector and analyse how these might impact the willingness of food companies 31 to voluntarily reduce salt in packaged foods, and to identify any implications for similar 32 voluntary nutrition policies.

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1 Methods

2 Study Design and Framework 3 The present study is a retrospective applied policy analysis informed by business analysis 4 (strategic management) approaches and frameworks, focussed on salt reduction. The research 5 questions were: ‘what are the key external political-legal, economic, social, technological, and 6 competitive food system drivers of the Australian packaged food sector?’ and ‘how might they 7 function to affect the willingness of a food company (business) to implement salt reduction 8 policy that is voluntary’? We conceptualised the main groupings of food system drivers as the 9 drivers of change used by business to conduct an external and competitive analysis. We 10 illustrate the context specificity of food system drivers using data relevant to selected food 11 manufacturing and supermarket industries. The study design, search, data collection, and data 12 analysis drew on two analytical frameworks and an external environmental analysis method 13 borrowed from the business discipline. 14 15 The term ‘Australian packaged food sector’ in this study includes food 16 processing/manufacturing and supermarket retailing in which the food manufacturing and 17 supermarket industries operate to produce and sell packaged foods. The supermarket industry 18 refers to full-service supermarkets – four supermarkets account for 80% of revenue, of which 19 two dominate the market.41 In contrast, the food processing is diverse, and as defined in the 20 Australian and New Zealand Standard Industrial Classification System (ANZSIC)42 includes 21 manufacturing and processing ‘groups’, (e.g. meat and meat product and bakery product 22 manufacturing). Within each group there are industry ‘classes’ (e.g. the cured meat and 23 smallgoods manufacturing class is a part of the meat and meat product ‘group’). To explore 24 how external and competitive food system drivers can be mediated by the characteristics of an 25 industry, we selected a sample of five ANZSIC classes that were illustrative of food 26 manufacturing industries producing products in the major food groups known to be leading 27 dietary sources of salt (e.g. meat products such as processed meat, and bread and cereal 28 products such as bread and pastries),43 and for which there was a corresponding Dialogue salt 29 reduction target.19 The food manufacturing industries were: cheese (ANZIC C1133(a)),44 cured 30 meat and smallgoods (processed meats) (ANZIC C1113),45 snack food (ANZIC C1191),46 31 cakes and pastry (ANZIC C1172),47 and bread manufacturing (ANZIC C1171).48

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1 The Analytical Framework

2 We derived our analytical framework from two established business frameworks; PEST and 3 Michael Porter’s Five Competitive Forces.31-33,49,50 Traditionally these frameworks have been 4 used as part of an external and competitive analysis of commercial51 and non-commercial 5 organisations52-54 and are included in standard business school texts.51 This type of analysis 6 seeks to identify and appraise the evidence in order to identify threats and opportunities 7 originating from institutions and people outside the organisation that affect its operations in a 8 given sector or industry.33,55 9 10 In this study we combined the PEST and Five Forces frameworks into one analytical 11 framework, to show the PEST external drivers, and competitive drivers of the food system 12 Figure 1. We used this adaption to identify the key external and competitive drivers most 13 relevant to the Australian packaged food sector, to analyse how these might impact the 14 willingness of food companies to voluntarily reduce salt in packaged foods and identify any 15 implications for similar policies aiming to change the food environment. 16

PEST external food system drivers

Competitive food Political-legal system drivers

Threat of entrants Economic

Food Power of Competitive Power of company suppliers rivalry buyers

Social Threat of substitutes

Technological

17 18 Figure 1. The analytical framework: PEST: external food system drivers, and Five Forces 19 competitive food system drivers. 20 21 The PEST external food system drivers are listed in the outer ring (see Supplementary file 2 22 for further detail). Briefly, the political-legal drivers refer to the role of the state and its stability,

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1 other political forces such as the power of stakeholder groups, the political ideology and 2 ensuing national and international laws and regulations.51,56 Understanding the potential of 3 these drivers to affect voluntary salt reduction requires knowledge of government philosophy 4 as it influences regulation and policy which in turn impact upon business decision making. The 5 economic drivers are a broad group of economic factors that have a direct influence on the 6 ability of a business to realise sufficient profit to remain competitive and access future 7 funding.57 Examples include input costs to manufacturing and the economic growth rate.51,56 8 An understanding of economic drivers can elucidate the nature of the economy and 9 competition.33 Social drivers are the cultural and demographic factors that include values, 10 beliefs lifestyle preference, and socio-economic status.51,56 Information of these drivers in 11 relation to salt reduction can provide insights into consumer behaviour.31,58 Technological 12 drivers refers to the introduction and adoption of technologies, and includes manufacturing, 13 distribution and transport systems, research and development.51,56 These drivers can variously 14 influence the development of new products, processes and materials for the production and sale 15 of packaged food, and early adoption and translation of new technologies into outputs can 16 confer a competitive advantage.33 The influence of one or more external food system drivers 17 on a given industry is highly contextual and will vary over time. 18 19 A framework to identify the competitive food system drivers - Porters Five Competitive Forces 20 framework32,49 is shown in the middle ring. Porters’ framework is a way to analyse the 21 competitiveness of an industry (see Supplementary file 2). Competitive rivalry refers to the 22 intensity of competition in an industry where businesses are in direct competition. It is typically 23 greatest when industry growth is modest, there are few differences between the products or 24 services of competing companies, and intense competition may limit the attractiveness to 25 invest. Rivarly is mediated by the bargaining power of buyers and suppliers, threat of entrants 26 and substitutes. Where the power of buyers or customers can force down prices and dictate 27 quality for example, if there are only a few buyers buyer power is especially high, in which 28 case buyers can force down prices particularly if it is easy for a buyer to switch between 29 suppliers. Conversely, powerful suppliers can force prices up. The threat of entrants describes 30 how easily a new business can enter an industry, if the barriers to entry are low new entrants 31 can increase competition by weakening the position and outlook of the existing businesses. The 32 threat of substitutes refers to how easily a buyer can switch between products of comparable 33 quality and function sold in the same industry or from another industry, for example, there are

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1 many brands of bread to choose from, but buying a pre-made sandwich from a café can be 2 substituted for bread. 3 4 Last, the internal factors (e.g. size, scale, power and influence, resources, strategy) of each 5 business operating within the sampled industries are not part of this study. However, for 6 completeness, the position of the food company is shown here to depict the complexity and 7 interconnectedness of the external and competitive food system drivers as they may influence 8 decisions by a business at any point in time. 9

10 The steps of an external environmental analysis – application to this study

11 As shown in Table 1, we adapted an external environmental analysis method used in strategic 12 analysis, as the basis for our applied policy analysis.33 Table 1 lists the 4 steps (scanning, 13 monitoring, forecasting, assessing) used iteratively to conduct an external environmental 14 analysis as part of a strategic analysis33 and our adaptation. 15 16 Table 1. Steps of an external environmental analysis, and adaptation for an applied policy 17 analysis 18 19 Step Application for a strategic Application for an applied policy analysis analysis Scanning To identify early signals of shifts Search and data collection: To identify in the external environment the different components of the main food system drivers based on the analytical framework as they relate to the Australian packaged food sector. Monitoring To understand the implications Ongoing observations and data through ongoing observations of collection: To understand the impact of changes and trends and any change in food system drivers – what, how and why. Forecasting To develop projections of the Ongoing exploration to understand how future based on monitoring food system drivers might impact the willingness of food companies to voluntarily reduce salt in packaged foods. Assessing To determine when, how, and Ongoing exploration of any implications the relative importance of for similar policy aiming to change the change and trends for a company food environment, and interpretation of strategy and management findings.

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1 Scanning: we iteratively searched the academic and grey literature to identify the key food 2 system drivers most relevant to the Australian packaged food sector (2013-2016). During this 3 time, the Australian Government purported to be pursuing salt reduction through voluntary 4 approaches – via the Dialogue.19 We developed a set of key search words (see Table 2) which 5 were informed by the analytical framework. 6 7 Table 2. Summary of the key data sources, key search words and document types 8 9 Key data sources Key search words for the external and Key document types competitive food system drivers

Electronic databases Public health policy, corporate social Articles of any type, ProQuest Central responsibility, corporate governance, conference proceedings, EBSCO, IBISWorld, regulation, select committees, shared books, business summaries and Google Scholar value, food, economic performance, reports, economic indicators Electronic and print consumer confidence, business and trends, government and media confidence, cost of living, economic official reports and other News reports, outlook, consumer trends, health publications, food industry newsletters, books trends, lifestyle preferences, research news reports, trends, expert Websites and development, innovation, food opinion pieces, expert Intergovernmental, technology, reformulation, new discussion papers government, other products, salt, sodium, food organisations (e.g. non- processing, industry, supermarkets, government, industry food manufacturers, competitive and professional) pressure, demand, market structure, price, power, profit, investment, concentration, market share. 10 11 Key data sources included multidisciplinary databases, electronic and print media for industry 12 newsletters – often via subscription (e.g. Australian Food News,59 FoodNavigator-Asia.com),60 13 news and views published by academics and researchers (e.g. The Conversation),61 14 intergovernmental, government and organisational websites (e.g. Australian Federal 15 Government sites). One author (XX) scanned the literature for components of the external 16 PEST and competitive food system drivers, and hand-searched reference lists to identify

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1 additional articles of interest.62 Articles were included if they were published in English, 2 included any aspect of the analytical framework and were relevant for the Australian packaged 3 food sector for the period 2013 to 2016. As this study was an applied policy analysis there was 4 no requirement for an in-depth appraisal of quality. 5 6 Data analysis was primarily conducted by the lead author (XX), who examined the 7 documentary data for relevance to the Australian packaged food sector to determine 8 preliminary food system drivers by deductively reviewing and categorising reviewed data 9 based on the constructs of the analytical model. Analyses were undertaken in each of 10 monitoring, forecasting and assessing (Table 1). As part of monitoring we made ongoing 11 observations and continued to collect, group and analyse data over the course of the study to 12 enhance our understanding of the impact of change and trends in food system drivers. 13 Monitoring was a perpetual, and principally, informal process between the researchers. 14 Through regular discussions of progress in voluntary salt reduction we discussed the key 15 external and competitive food system drivers that had been identified and the possible 16 implications for voluntary salt reduction. This informal approach was supported by 17 participation in network groups (e.g. professional public health association events, receipt of 18 business and public health newsletters, and discussions with food companies). Additionally, 19 we incorporated our preliminary observations and findings into invited presentations on 20 voluntary salt reduction; of which two were to a business audience (2014) and involved 21 participatory discussion, and two as conference presentations to a public health audience (2017 22 and 2019). Collectively the monitoring ‘tools’ provided knowledge that enhanced our 23 understanding of food system drivers and also supported ongoing exploration through 24 Forecasting. Forecasting involved checking our understanding and interpretations of how the 25 food system drivers might impact the willingness of food companies to voluntarily reduce salt 26 in packaged foods. This was largely aided by the business literature (e.g. industry reports – 27 IBISWorld,63 and newsletters we subscribed to such as Australian Food News,59 and business 28 marketing and strategy theory). The last step, Assessing involved the exploration of any 29 implications for similar policy aiming to voluntarily change the food environment, and the 30 interpretation of findings that involved exploring the preliminary implications arising from 31 steps 2 and 3. These were documented by XX and discussed with study researchers throughout 32 the course of this study as part of drafting the first and subsequent drafts of this manuscript.

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1 Results 2 In all literatures we found relevant documentary evidence of drivers of change and identified 3 these as food system drivers (See Figure 2). We found that as part of a complex food system, 4 the interplay between food system drivers created an external and competitive environment 5 unsupportive of voluntary salt reduction by food companies. Analysis by industry highlighted 6 the highly contextual nature of food system drivers, their impact upon a given industry and the 7 need to consider context specificity in nutrition policy aiming to change the food environment. 8 The results are reported using the external drivers of the food system (PEST) followed by 9 competition as a food system driver. The implications for salt reduction and other nutrition 10 policies aiming to change the food environment are summarised in the discussion. 11

PEST external food system drivers Political-legal Threat of entrants Barriers to entry • Neoliberal ideology, free effected by economies market economy of scale, commercial • Complex regulatory mix of Competitive food relationship, modest private/public governance growth / spending to • Shared value used to re- system drivers protect market share, access to sites orientate to stakeholder model Power of buyers Economic Power of suppliers Supermarkets have Competitive rivalry strong bargaining • Structural change Fragmented supplier Intense competition in base; bargaining power to dictate from resource boom, Food a price based market favourable terms from period of transition power mediated by with muted domestic company company size, brand, suppliers. Consumers • Strong but weakening growth, and economic hold bargaining power and access to multiple challenges dollar distribution channels but rarely exercise it. • Relative high input costs Threat of substitutes Social Ease of substitution • Strong interest in from branded to health, but not private label, and necessarily low salt alternative suppliers / sectors (e.g. take-out • Health often traded off food) with taste, price, and convenience • Negligible consumer Technological activism for low salt • Diminishing government support for ongoing investment in food processing; varied levels of assistance to innovate • Application of technology to integrate and create a demand driven supply chain 12 13 Figure 2. Political-legal, economic, social, technological and competitive food system drivers 14 of change

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1 External drivers of the food system

2 Political-legal food system drivers

3 In addition to the state, other organisations compete for a voice in laws and regulations.33 Well- 4 designed regulation is recognised as supporting the economy, reducing anti-competitive 5 behaviour, and providing a level-playing field.57 6 7 The types of organisations competing to influence state regulation and policy relevant to 8 nutrition included Australian advocacy organisations64-66 and the more powerful domestic food 9 industry with a narrative of jobs, growth and investment.67 Though there was some evidence 10 the Australian public supported government requiring food companies to reformulate, this was 11 not specific to salt.68 We found no evidence of a grass-root societal campaign or investor led 12 campaigns to ‘divest of salt’. 13 14 We identified a pervasive neoliberal ideology, as popularised from the work of Friedman69 15 which emphasises individual choice, personal autonomy, and a liberal market economy.70,71 A 16 shareholder model of corporate governance is a characteristic of business in a liberal market 17 economy such as Australia72 whereby the most important stakeholder is the shareholder, and 18 maximising short-term shareholder value the primary marker of success.73,74 Though there was 19 some evidence the shareholder model was coming under increased scrutiny75 the Australian 20 law on directors’ duties provides limited guidance to directors on the scope of business actions 21 permitted beyond those for the direct financial benefit of a company.75,76 22 23 The Australian federal system of government divides power between the commonwealth, 24 state/territory, and local levels.77 This means that in addition to private, self-imposed, 25 standards78 – often a condition of doing business79-82 – Australian businesses are exposed to 26 multiple levels of state intervention affecting their operations (and profitability). Regulatory 27 areas relevant to the production and sale of packaged food include work health and safety, 28 environmental, employment, transport, taxation (e.g. federal taxation, state and local levies), 29 food standards and labelling, pricing, supply, trading, and competition. Food companies must 30 comply with the relevant regulations of the industry in which they operate, meaning that the 31 regulatory impost will vary by food manufacturing industry; we found regulation varied from 32 light (cake and pastry)47 to heavy (processed meats).45 Nonetheless, a plethora of ‘red-tape’ –

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1 especially from duplicate and poorly designed regulation - was widely perceived by business, 2 including food, as inefficient, costly, and an impediment to growth and investment.83-85 3 4 Although the regulatory burden of Australian business was analogous to that of other 5 countries,57 the incumbent Prime Minister (2013-2015) pushed to remove ‘red-tape’.86 This, 6 alongside a business preference for an arm’s length relationship with the state72 also appear to 7 have influenced nutrition policy as exemplified by the Dialogue.16,19 Such ‘soft law’ 8 approaches to government engagement with the food industry were politically more acceptable 9 compared with ‘hard law’ alternatives.87 Yet, we found the Australian packaged food sector 10 met few of the industry-level factors required for successful self-regulation including product 11 homogeneity, concentration and tangible economic benefits to businesses from the adoption of 12 self-regulation.88 Whilst we found product homogeneity and concentration were more likely to 13 be met in the food manufacturing industries (where a specific group of companies or businesses 14 operate in a similar area)30 there was little evidence of tangible economic benefits to business 15 from salt reduction.

16 Economic food system drivers

17 Our focus here is on the drivers in the domestic economy, but we acknowledge the substantive 18 influence of the global economy.33 We identified several economic drivers that created a 19 challenging environment for food companies who needed to ‘put goods on the shelf at a price 20 that works for producers, manufacturers and consumers’.89 Australia was generally regarded 21 as a small scale but geographically large90 and expensive country in which to manufacture food 22 with high costs of labour and utilities.84,89,91 The Australian economy was also undergoing a 23 structural change with the end of the mining investment boom from a protracted 20-year period 24 of strong income growth to one of slower growth, weakening terms of trade, higher 25 unemployment, sluggish nominal wage growth, and, slowing of the standard of living (income- 26 cost of living).57,92,93 27 28 Although Australia is a net food exporter, the strong but weakening Australian dollar57 eroded 29 the competitiveness of Australian food overseas and increased that of food imports (e.g. in 30 supermarkets).41,94 While imports of inputs for domestic processing (e.g. additives, packaging 31 materials)84,94,95 were also cheaper, salt remained one of the cheapest (and most versatile 32 ingredients).96 33

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1 Social food system drivers

2 In addition to the food environment, individual and social factors that affect consumer 3 behaviour were found to include socioeconomic status, culture, knowledge, beliefs, and 4 attitudes about food and food labelling.97 Whilst social factors contribute to social inequalities, 5 teasing out influences on food choice is highly complex58,97 though a higher socioeconomic 6 status is generally associated with a healthier diet.98 7 8 Despite high consumer support across the socioeconomic spectrum for the reduction of added 9 salt,68 salt was found to be an attribute few consumers actively looked for on the product 10 label.68,99,100 Additionally, difficulty in interpreting nutrition labels may also have different 11 effects across socioeconomic groups.101 Health literacy was cited as one possible reason for 12 people of lower socioeconomic status being less aware and unlikely to use the Australian 13 Government led Health Star Rating System – a way of comparing the nutrient content of similar 14 packaged foods rated from 0.5 to 5 stars.102 15 16 Effective marketing and promotional strategies are underpinned by a thorough analysis of the 17 most relevant drivers for the products/services a business provides to its customers31,103 – and 18 in the case of food often to the detriment of public health.104 Health was found to be a product 19 attribute of increasing value to consumers;105 but at the point of purchase often traded off 20 against taste, convenience, and price.90,106,107 With respect to specific ‘health concerns’, low 21 salt was frequently weaker compared to the push for low-fat or low-sugar.45,47,48,108-110 The 22 salience of salt to consumers as a product attribute was found to differ between industries (e.g. 23 lower salt was a strong product attribute in snack food).46 Similarly, consumer acceptability of 24 products with a lower salt content was found to differ between foods produced across the food 25 manufacturing industries (e.g. a reduction of up to only 37% in bread but as high as 67% in 26 processed meat was possible without compromising consumer acceptability).111 27

28 Technological food system drivers

29 Industry and government policies promoting investment in infrastructure and training (e.g. in 30 food technology) was reported to be fundamental for the identification and translation of 31 technologies in product, production and packaging development to drive growth, efficiency, 32 and ensure a reliable, efficient supply of safe and nutritious food.90,95,112,113 However, findings

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1 indicate industry investment in technology was relatively low at the time of this study; net 2 capital investment in food manufacturing had declined114 and concerns about diminishing 3 government support for investment, particularly in skills84,112 were reported to risk the 4 competitiveness of Australian-based companies at a time when some food companies were off- 5 shoring research and development. The technical challenge to reduce salt differs with the food 6 type. In addition to physical and sensory attributes such as taste and texture, salt reduction has 7 potential knock-on effects for processing, packaging, shelf-life, food safety and 8 preparation.99,106,115 Reformulation requires a business to invest its resources; it was noted that 9 sharing innovation within an industry was mediated (at least in the case of processed meats)45 10 by the number of food companies and their relative market power within an industry. 11

12 Competition as a food system driver

13 Competition as a driver of change refers to the rivalry between businesses offering products 14 that are broadly similar; competitive advantage is secured when a business provides products 15 that satisfy consumer needs better than their competitors, meaning that businesses must 16 consider consumer needs and competitor actions within any given industry.31 In our study 17 industries include the supermarket and food processing industries in which food companies 18 who retail or primarily manufacture similar products compete. For example, food companies 19 in the bread industry will compete with each other but not necessarily compete with food 20 companies in the cheese industry. The structure of an industry includes the number of 21 competing companies and market share concentration and is one factor that influences 22 competition. In many instances between 2-3 food companies were found to dominate any given 23 industry.84 Of the food manufacturing industries we reviewed, with the exception of cake and 24 pastry manufacturing which was low,47 industry concentration in four was medium44-46,48 (i.e. 25 four food companies account for 40-70% of industry revenue) and high in the supermarket 26 industry41,116,117(i.e. four supermarkets account for >70% of industry revenue). 27 28 We found the level of competition (as defined by IBISWorld63 – see Supplementary file 3 for 29 the IBISWorld criteria used to define the level of competition) was high in the supermarket41 30 and food manufacturing industries44,46-48 with the exception of processed meats45 which was 31 medium. The supermarket industry,41 cheese,44 processed meats,45 and bread48 food 32 manufacturing industries were also mature, whilst the cake and pastry food manufacturing 33 industry47 was in decline, and snack food manufacture was growing.46 Subdued economic

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1 growth, soft consumer demand114 and a typically slower growth relative to the economy for 2 mature industries41 were identified as likely to further intensify competition. In this situation 3 theory32 posits a business may experience pressure to lower prices, and defend market share 4 through investment in marketing and promotions. 5 6 We found the threat to market share and thus profitability of existing food companies within 7 the five food manufacturing industries included in this study was mixed. With the exception of 8 cake and pastry (low)47 and supermarkets (high)41 barriers to entry for the other food 9 manufacturing industries were medium.44-46,48 Despite high barriers to entry in the supermarket 10 industry, ALDI and Costco (but ALDI in particular) have proved to be a potent source of new 11 competition in a price-based market84 to the incumbent full-service supermarkets (Coles and 12 Woolworths) of similar size and offering.117,118 ALDI redefined the retail landscape with a low- 13 priced but quality private-label offering119 forcing Coles and Woolworths to invest in their 14 private-label range.120,121 More than a decade of intensified and prolonged price 15 rivalry84,117,122,123 ensued with Coles and Woolworths accused of playing copy-cat strategy.122 16 The net impact was perceived as squeezing profitability throughout the Australian packaged 17 food sector122,124 within the context of a challenging economic trading environment. 18 19 The introduction of the voluntary Food and Grocery Code of Conduct in 2015, was described 20 as a “step towards levelling the playing field’125 between supermarkets and suppliers and 21 particularly helpful to smaller food companies with a weak brand118 and/or market 22 position.117,118,126 Up until this time, data sources described supermarkets striking unfavourable 23 terms with suppliers in supply contracts and imposing marketing fees.84,117,118 In addition to 24 leveraging power in marketing, product placement, shelf-allocation, and retail pricing 25 decisions,117 and substituting domestically produced foods with imported and cheaper 26 alternatives.118 27 28 In relation to the threat of substitution with regard to consumers as buyers we found the food 29 service sector provided consumers with an easy substitute for home cooking and thus products 30 usually bought from a retailer such as supermarkets could be substituted for those bought from 31 restaurants, fast food take-away outlets or online delivery).41,122,127 Of the food manufacturing 32 industries we examined we also identified substitution between products (e.g. on-the-go 33 breakfast drinks, cereal and yogurt bars were substitutes for bread48 – and widely available in

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1 both retail and food service industries within the consumer food environment (e.g. 2 supermarkets, small grocery stores, convenience stores, forecourts, and cafes).

3 Discussion 4 Our results show that the interplay of food system drivers has created a highly unfavourable 5 environment for voluntary salt reduction in Australia. A dominant neoliberal paradigm, and 6 market expectation for linear economic growth and short-term profitability reinforce a 7 shareholder model of corporate governance and intense competition with potential to dampen 8 profitability and constrain innovation for health. Faced with a difficult economic environment 9 and in a price driven market there appears to be no economic driver to incentivise domestic 10 food companies to voluntarily reduce salt. Further, a weak overall trend for salt reduction is 11 unlikely to incentivise sufficient food companies to prioritise salt reduction across their 12 portfolio. To support a voluntary approach, lower salt foods must be commercially viable to 13 further both economic and public health goals. The argument that compliance with voluntary 14 opportunities can be a means for companies to differentiate from competitors, enhance 15 competitive advantage and potentiate profit128,129 did not appear to hold true for salt reduction 16 for the period of this study. Identifying ways to change this unfavourable situation are critical 17 if Australia is to achieve the 2025 salt reduction target.38 The following sections outline how 18 key food system drivers could be harnessed to influence business behaviour in the direction of 19 action with voluntary nutrition initiatives, as well as the implications of our findings for the 20 design of nutrition initiatives themselves. 21 22 We identified three major themes from our analysis of external and competitive food system 23 drivers relevant to salt reduction and potential implications for nutrition policy. First, we 24 identified the shareholder model was coming under increased scrutiny, if the purpose of a 25 business is perceived to both make a profit and deliver upon broader societal goals.74,130-132 26 More recent data indicate a continuing trend133-135 to adopt this position. Although our results 27 show there is little legal incentive for food companies placing non-shareholder interests (such 28 as salt reduction) at the heart of the business agenda, as experienced by Campbell Soup who 29 famously reduced salt in soups for health, but lost market share, and announced to investors 30 salt was being added back.136 This finding aligns with a more general critique of the stakeholder 31 model as largely failing to consider the political-legal and economic food system drivers137 and 32 a somewhat undefined concept in practice.138 Yet, its adoption could provide an opening for

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1 the concept of shared value. Proposed by Porter, shared value is where policies and practices 2 to increase competitiveness simultaneously improve the economic and social conditions in the 3 communities in which they operate.130 Its application in the Australian packaged food sector 4 could be to frame nutrition policy to shareholders. The United Nations Global Compact - whose 5 mission is to provide ‘business as a force for good’ –supports companies to advance societal 6 goals based on the SDGs,139 and other global food corporations have also adopted shared 7 value.140,141 The incorporation of nutrition considerations into investor decision making could 8 be one way of applying shared value. Indeed, a recent review noted substantial scope to apply 9 a range of investment strategies used for other areas of responsible investment to the area of 10 nutrition.142 While the inclusion of nutrition-related considerations as part of investment 11 decisions is currently extremely limited,142 50 investment firms managing US$3 trillion-worth 12 of assets have signed the Access to Nutrition Index (ATNI) Investor Statement, signalling a 13 commitment to consider nutrition in their investment analyses.143 14 15 Second, there is an opportunity to harness the power of supermarkets and consumers. While 16 we found the asymmetry of power in favour of the supermarket industry had negatively 17 impacted upon the Australian packaged food sector, the Food and Grocery Code of Conduct 18 has made some positive change to relationships between retailers and suppliers although there 19 remains some way to go.144 Healthy competition benefits all stakeholders. Seen in this context, 20 supply contracts with food manufacturers are an opportunity to promote collaboration, 21 commitment and investment in innovation.145,146 For example, supermarkets could adopt in- 22 store marketing, promotion, ranging, shelf allocation, and labelling practices that support 23 product reformulation initiatives. 24 25 Supermarkets have demonstrated their use of market power to benefit broader consumer and 26 societal good during the recent food system shock arising from the COVID-19 pandemic and 27 associated responses.147 In response to pandemic-prompted panic-buying that placed pressure 28 on the food distribution system and led to shortages, supermarket management identified 29 opportunities for constructive collaboration and new supply and distribution strategies. This 30 was facilitated in Australia by the relaxation of competition law,148 further highlighting the 31 opportunity for strategic policy to maximise food system benefits. Though yet to manifest as a 32 driver for lower salt, there is a clear opportunity to leverage off consumer health trends for 33 nutrition policy, although this might be tempered by uncertainty in economic recovery and 34 even higher price driven motives of consumers as one impact of the COVID-19 pandemic.149

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1 Competitive advantage requires food companies providing products that meet consumer needs 2 better than their competitors. Capturing consumer perspectives on the quality and usage of the 3 food environment is similarly crucial for ensuring that nutrition interventions meet consumer 4 needs. Citizen Science, used widely in the natural sciences is used infrequently in public health 5 nutrition,150 yet holds tremendous potential to release the largely unrealised bargaining power 6 of the consumer. 7 8 Third, understanding food system drivers and responsiveness can inform nutrition policy 9 design. Our analysis, shows food companies perception of an already onerous regulatory 10 burden could curb support of regulation – a process that involves a focused attempt to change 11 behaviour according to defined standards or purposes, with the intention of producing a 12 particular outcome or outcomes151 – whether by state or non-state actors and part explains why 13 ‘hard law’ such as mandating salt reduction targets has generally been resisted. Overcoming 14 this would depend upon political pressure applied to the Australian packaged food sector, and 15 independent monitoring.152 The apparent absence of powerful organisations and movements 16 advocating for nutrition policy appears to have been a contributory factor for policy inertia for 17 salt reduction. 18 19 Exploring regulatory mechanisms151 would benefit future policy initiatives. In addition to the 20 shortcomings of the Dialogue (e.g. lack of monitoring, limited government leadership and 21 Dialogue inactivity)16 we identified that voluntary self-regulation is conditional upon the 22 external environment88,153 and is an uneasy fit in the Australian business environment. Even 23 when external and competitive food system drivers encourage food companies to make 24 voluntary changes, there is little evidence on whether and in what circumstances voluntary 25 ‘soft’ forms of regulation are more cost-effective than stronger forms.11 Mandatory salt 26 reformulation has been found to consistently remove larger quantities of salt from the food 27 supply than voluntary reduction.152 In light of product substitution, it is evident that nutrition 28 policy (and salt reduction) needs to consider the many ways in which the consumer interacts 29 with their food environment. A comprehensive national nutrition policy applicable to multiple 30 sectors and food industries, with clear implementation and accountability structures,154 could 31 lessen the threat of substitutes from unhealthier alternatives and minimise any commercial risk. 32 33 We identified that the structure of an industry could be a barrier to sharing salt reduction 34 expertise and knowledge, and could be worthy of consideration in the strategic deployment of

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1 resources to provide businesses with technological support. Opportunities might include the 2 provision of pathways and resources to assist smaller companies - as the Scottish Government 3 did with the provision of free, tailored recipe reformulation support155 or the more recently Vic 4 Health ‘Unpack the salt, salt reformulation in Australia’.156 5 6 While, this applied policy analysis has focussed on salt reduction, the frameworks we have 7 adapted here could be used to analyse other food system issues to identify further enablers or 8 barriers arising from external and competitive food system drivers to transforming the food 9 environment. Nutrition policy at all stages of the lifecycle faces many hurdles; there is a 10 growing awareness of the importance to better understand these drivers and their 11 interactions.157 Our analysis illustrates the importance of identifying food system drivers, their 12 interconnections and context specificity if global recommendations are implemented locally. 13 In particular, the specific attention to competition as a food system driver in our analytical 14 framework extends the contribution of other food system analysis approaches that have already 15 proved valuable in public health, including value chain and supply chain analysis.51,158,159 16 17 The aim of the present study was to unpack key external and competitive food system drivers 18 and how they might shape business decision making. We acknowledge that the scope of our 19 study included only a sub-set of food manufacturing industries, however these were illustrative 20 of key food industries producing foods targeted for salt reduction as part of the Dialogue. The 21 scope and design of our study precluded an analysis of the internal factors (e.g. size, scale, 22 power and influence, resources, strategy) as strengths and weaknesses of the many food 23 companies within those industries. It is almost certain that internal factors of each business will 24 differ and will be powerful influences on their capability and capacity to plan for and react to 25 the opportunities and threats posed by external and competitive food system drivers.51 Future 26 research could incorporate analysis at a business level to highlight the heterogeneity of food 27 companies – their strengths and weaknesses – as part of a strengths, weaknesses, opportunities 28 and threats (SWOT) analysis of the implications for salt reduction in a given industry. 29 30 We took an interdisciplinary approach in this study, identified as a critical first step to 31 understanding complex systems.29 We drew on two business frameworks and a method used 32 widely in business but unfamiliar to many public health practitioners. Translating this for a 33 non-business audience has been challenging as has the breadth and content of data requiring 34 an understanding of multiple disciplines. Our experience aligns with a core challenge in the

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1 political economy analysis for health; to find a robust method of analysis that can be easily 2 learned, applied and generates usable knowledge for stakeholders.160 Although we relied on 3 the authors’ knowledge of public health, business, and policy, there was the potential for 4 knowledge gaps and bias. In using qualitative data, much from the grey literature, there was an 5 additional risk of bias where documentary data is edited to frame a message in a particular 6 way.161 However, the steps we undertook including scanning, (data search, and selection) 7 sought to mitigate this risk by iterative collection from multiple sources over a period of time 8 and excluding articles with a blatant bias. 9 10 In conclusion, business models can provide meaningful insights for nutrition policy on how 11 external and competitive food system drivers can thwart policy goals. In this case, the nuances 12 of external food system drivers highlighted areas of focus to incentivise voluntary action and 13 illustrated the importance of political-legal, economic and consumer strategies to reduce salt in 14 packaged foods. Our examination of food system drivers indicates that there is an opportunity 15 for public health actors to harness food system dynamics including ‘shared value’ and the 16 power of supermarkets in conjunction with creative regulatory strategies to increase the 17 likelihood of a successful nutrition policy outcome. 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34

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1 152. Hyseni L, Elliot-Green A, Lloyd-Williams F, et al. Systematic review of dietary salt 2 reduction policies: Evidence for an effectiveness hierarchy? PLOS ONE. 3 2017;12(5):e0177535. doi:10.1371/journal.pone.0177535 4 153. Coglianese G. Management-Based Regulation: Prescribing Private Management to 5 Achieve Public Goals. Law & Society. 2003;37:691-729. 6 154. Kraak VI, Swinburn B, Lawrence M, Harrison P. An accountability framework to promote 7 healthy food environments. Pub Health Nutr. 2014;17:2467-2483. 8 155. Food and Drink Federation Web site. Scotland's small businesses cut salt, fat & calories in 9 iconic foods. 2014 Dec 11; https://www.fdf.org.uk/news.aspx?article=7104. Accessed 10 Dec 4, 2015. 11 156. VicHealth Web site. Unpack the salt, salt reformulation in Australia. 2019; 12 https://unpackthesalt.com.au/salt-reformulation-in-australia/. Accessed May 11, 2020. 13 157. Reich M, Balarajan Y. Political economy analysis for nutrition policy. Lancet. 2014;2:e681- 14 682. 15 158. Downs S, Thow A, Ghosh-Jerath S, Leeder S. Identifying the barriers and opportunities for 16 enhanced coherence between agriculture and public health policies: Improving the fat 17 supply in India. Ecology of Food and Nutrition. 2015;54:603-624. 18 159. Hawkes C, Ruel MT. Value Chains for Nutrition. Washington, DC: International Food Policy 19 Research Institute (IFPRI);2011 Jun. 20 160. Reich MR. Political economy analysis for health. Bull World Health Organ. 2019;97:514. 21 161. Johnston W, Leach M, Liu A. Theory Testing Using Case Studies in Business-to-Business 22 Research. Ind Market Manag. 1999;28:201-213. 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42

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1 Supplementary File 1 2 Summary of the Australian Health and Food Dialogue Targets and results 3 4 All data in Table 1 and definitions have been sourced from: Australian Government Department of 5 Health. Healthy Food Parternship-Food and Health Dialogue. Available from: 6 https://www1.health.gov.au/internet/main/publishing.nsf/Content/fhd 7 8 Table 1 Summary of the Dialogue sodium reduction targets and timeframe for action Food Category Sodium Reformulation Target Timeframe for action

Bread 400mg/100g on defined bread products1 May 2010 – Dec 2013 Ready-to-Eat Breakfast 15% reduction on defined products that exceed May 2010 – Dec 2013 Cereal 400mg/100g2 Simmer Sauce 15% reduction for Asian-style simmer sauces3 Jan 2011 – Dec 2014 exceeding an action limit level of 680mg/100g 15% reduction for pasta4, Indian-style5 and other simmer sauces exceeding the action level of 420mg/100g Seek opportunities to reduce sodium in simmer sauces that are significant contributors to market share, but are below the action level of 680mg/100g (Asian-style); 420mg/100g (pasta, Indian-style and other simmer sauces) Aim for 15% reduction in new products versus current like benchmarks, when the benchmarks are above the action levels, and as low as practical when below action levels. Processed Meat6 Maximum sodium content of nominated bacon and Jan 2011 – Dec 2013 ham/cured meat products to 1090mg/100g Maximum sodium content of nominated emulsified luncheon meats to 830mg/100g Soups Maximum sodium content of 290mg/100g across dry Dec 2011 – Dec 2014 soup products. Average sodium target (weighted by sales volume) of 290mg/100g and a maximum target of 300 mg/100g across wet/condensed soup products. Savoury Pies7 10% reduction in sodium across wet savoury pies Mar 2012 – Mar 2014 with sodium levels exceeding 400mg/100g. 10% reduction in sodium across dry savoury pies with sodium levels exceeding 500mg/100g. Potato/Corn/Extruded Average sodium target of 550mg/100g and a Dec 2012 – Dec 2015 Snacks maximum target of 800mg/100g across potato chip products8. Average sodium target of 950mg/100g and a maximum target of 1250mg/100g across extruded snack products9. Average sodium target of 850mg/100g and a maximum target of 1100mg/100g across salt and vinegar products10.

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Food Category Sodium Reformulation Target Timeframe for action

Average sodium target of 550mg/100g and a maximum target of 700mg/100g across cereal based snack products11. Savoury Crackers Maximum sodium content of 850mg/100g across Dec 2012 – Dec 2015 plain crackers12, or, 15% sodium reduction towards the maximum target for products significantly higher than the maximum. Maximum sodium content of 1000mg/100g across flavoured crackers13, or, 15% sodium reduction towards the maximum target for products significantly higher than the maximum. Maximum sodium content of 850mg/100g across flavoured rice crackers, flavoured rice cakes and flavoured corn cakes14 or, 15% sodium reduction towards the maximum target for products significantly higher than the maximum. No target for plain rice crackers/cakes/corn cakes15.

Cheese Maximum sodium target of 710mg/100g for Cheddar Mar 2013 – Mar 2017 and Cheddar Style variety cheese products16. Maximum sodium target of 550mg/100g across Mozzarella Cheese products17. Maximum sodium target of 1270mg/100mg, or, a 10- 15% reduction in sodium towards the maximum target for chilled processed cheese products18 with sodium levels significantly above the agreed maximum target of 1270mg/100g. 1 2 Definitions 3 1 Defined bread products: those made by baking a yeast-leavened dough prepared from one or 4 more cereal flours or meals and water. This includes, for example, sliced loaf breads, rolls, 5 bagels, English muffins and fruit breads. The definition does not include value-added products 6 such as cheese and bacon rolls. 7 2 Defined ready-to-eat breakfast cereal products: plain or mixed flakes, puffed grains, 8 processed grains, fruit/flake mixtures with or without other ingredients. 9 3 Based on flavours to replicate Asian recipes. Often based on high sodium sauces (e.g. soy, 10 fish or oyster sauce) and often labelled as noodle sauce or stir-fry-sauce. 11 4 Mainly tomato-based sauces, but includes pasta bakes, may also be chunky or smooth and 12 contain other ingredients such as vegetables and/or meat. Pasta sauces can be pout-in, stir-in, 13 cook-in or stir-thru. 14 5 Based on flavours to replicate Indian receipts and often labelled as curry sauces. 15 6 Defined by the Dialogue as: ready-to-eat meats (excluding pate, cooked uncured meats (e.g. 16 roast meats) and dried meats); bacon, and pasteurised sausages (including frankfurters, 17 chorizos, cheerios etc.) 18 7 Defined savouring pies: wet meat and vegetarian pies (meat/poultry only or with vegetables 19 in ‘gravy base’ e.g. steak and kidney, chicken and mushroom), and dry meat and vegetarian 20 products (e.g. sausage rolls, pasties, pork pie and pot pie).

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1 8 Defined potato chip products: thin potato slices that are generally deep fried and then 2 flavoured using e.g. salts, seasonings, herbs or spices. All flavours except salt and vinegar. (e.g. 3 thick-cut, thin-cut, crinkle-cut, sticks, deli-style, Pringles). 4 9 Defined extruded snack products: starch materials (e.g. corn, maize, wheat, rice, potato flour) 5 that are transformed into hot melt fluids and then expanded or puffed via an extruder to form a 6 snack. All flavours except salt and vinegar. (e.g. Cheese Puffs, Bacon Balls, Twisties, Burger 7 Rings, Cheezels). 8 10 Defined as all products that are salt and vinegar flavoured. 9 11 Defined cereal-based snack products: cereal grains (e.g. wheat, corn, maize kernels used to 10 make dough, which is then sheeted to thin, uniform dimensions and cut to form the snack and 11 fried. All flavours except salt and vinegar. (e.g. corn-based snacks such as Doritos, and 12 wholegrain snacks such as Grain Waves). 13 12 Defined plain crackers (flour-based): crackers with no added flavourings. Includes 14 pepper/grain varieties, but not those with added salt flavours. (e.g. plain crackers with a flaky 15 texture, wholegrain/wholemeal, crispbreads, other varieties such as water crackers. 16 13 Defined flavoured crackers (flour-based): crackers with added flavourings. Includes those 17 with added salt flavours. (e.g. savoury biscuits, flavoured crackers with flaky texture, other 18 herb and salt varieties). 19 14 Defined flavoured rice crackers/cakes/corn cakes: cakes made from puffed rice/corn, with 20 added flavourings, crackers made from predominantly rice flour, with added flavourings, 21 includes those with added salt flavourings and original flavoured. 22 15 Defined plain rice crackers/cakes/corn cakes: cakes made from puffed rice/corn, with no 23 added flavourings, crackers made from predominantly rice flour with no added flavourings. 24 16 Defined Cheddar and cheddar style variety cheese products: mild, tasty, extra tasty, and 25 vintage cheese products. 26 17 Defined Mozzarella Cheese products: low moisture mozzarella cheese products only. Fresh 27 mozzarella and pizza cheese blends are excluded. 28 18 Defined Chilled Processed Cheese products: all processed cheese products which need to be 29 refrigerated. 30 31 32 Table 2 Summary of results for the Dialogue sodium reduction targets. 33 Food Category Market Share (%) Proportion (%) of Mean sodium content 100/mg of the companies products that met the ± SD at baseline and that committed to target at baseline and collection the Dialogue collection2,3 target1 Baseline Collection Baseline Collection* Bread 80% 28 86 432 ± 95 390 ± 58* Ready-to-Eat 60% 55 83 393 ± 256 266 ± 160* Breakfast Cereal Simmer Sauce 85% Asian style 41 55 820 ± 513 825 ± 566 Indian style 40 68 497 ± 157 425 ± 182 Pasta sauces 33 76 474 ± 158 380 ± 120* Simmer sauces 25 46 492 ± 104 476 ± 476 Processed meats 95% Bacon 25 59 1230 ± 250 1093 ± 186*

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Food Category Market Share (%) Proportion (%) of Mean sodium content 100/mg of the companies products that met the ± SD at baseline and that committed to target at baseline and collection the Dialogue collection2,3 target1 Ham and other cured 47 80 1105 ± 263 1013 ± 229* meat Emulsified luncheon 23 44 945 ±162 901 ± 144 meat Soups 90% Dry 27 78 320 ± 69 304 ± 80 Wet 75 80 295 ± 61 280 ± 67* Savoury Pies 85% Wet, meat and 28 51 454 ± 94 402 ± 90* vegetable based Dry, meat and 37 28 567 ± 116 550 ± 82 vegetable based Potato/Corn/Extruded 100% Snacks Cereal based snacks 88 92 579 ± 190 499 ± 163* Potato chips 93 92 602 ± 180 589 ± 157 Extruded snacks 96 94 1064 ± 195 907 ± 227* Salt and vinegar 53 78 1045 ± 256 928 ± 928 products Savoury Crackers 80% Flavoured (flour 72 79 898 ± 259 840 ± 218 based) Plain (four based) 77 87 746 ± 302 630 ± 198* Rice crackers, cakes, 70 76 655 ± 323 687 ± 322 corn-cakes, flavoured Cheese 80% Cheddar and cheddar 84 86 649 ± 56 654 ± 50 style Low moisture 63 68 522 ± 120 548 ± 105 Mozzarella Processed chilled 37 43 1300 ± 358 1341 ± 290 1 2 1 Data sourced from: Australian Government Department of Health. Healthy Food Parternship-Food 3 and Health Dialogue. Available from: 4 https://www1.health.gov.au/internet/main/publishing.nsf/Content/fhd 5 6 2 Data sourced from: The National Heart Foundation of Australia, Report on the Evaluation of the 7 nine Food Categories for which reformulation targets were set under the Food and Health Dialogue - 8 for submission to the Department of Health 6 May 2016. Available from: 9 https://www1.health.gov.au/internet/main/publishing.nsf/Content/7BD47FA4705160A6CA25800C00 10 8088B9/$File/Healthy%20Food%20Partnership%20Evaluation%20Report_Heart%20Foundation.pdf 11 12 3 The month and year for baseline data varied by food category: Bread, March 2009, Ready-to-Eat- 13 Breakfast Cereals, Jan 2010; Simmer Sauces, and Processed Meats, May 2010; Soups, Feb 2011; 14 Savoury Pies, and Cheese, May 2011; and, Potato, Corn, and Extruded Snacks, and Savoury Crackers, 15 May 2012. The month and year for collection data varied by food category; Bread, Aug-Sep 2015; 16 Ready-to-Eat-Breakfast Cereals, and Processed Meats, Apr-May 2015; Simmer Sauces, and Soups, Jun-

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1 Jul 2015; Savoury Pies, Sep-Oct 2015; Potato, Corn, and Extruded Snacks, Oct 2015; Savoury Crackers, 2 Jul-Aug 2015; and, Cheese, Sep 2015. Note: the timeframe (start and end) of the Dialogue targets does 3 not always align with the date of the baseline and collection data. 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35

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1 Supplementary File 2

2 A description of food system drivers 3 Political-legal, economic, social, and technological (PEST) external drivers 4 5 • Political-legal drivers refers to the role of the state and its stability, other political 6 forces, the political ideology and ensuing national and international laws and 7 regulations, and includes: political ideology, governance structures laws and 8 regulations in policies such as; trade agreements; competition corporate law; food 9 regulation; and, the power of stakeholder groups (e.g. non-governmental, international 10 health organisations, food industry associations, consumer organisations, and 11 concerned media). 12 • Economic drivers refers to a broad group of economic factors and includes: the real 13 exchange rate; economic growth rate; consumer confidence; unemployment rate, 14 interest rate; inflation rate; and, input costs to manufacturing (worldwide commodity 15 prices, national utility prices, cost of fuel, and labour rates). 16 • Social drivers refers to cultural and demographic factors and includes: cultural values; 17 social norms, attitudes and lifestyle preferences; population growth; level of education; 18 distribution of wealth; age distribution; household composition; ethnicity; class; and, 19 gender. 20 • Technological drivers refers to the introduction and adoption of technologies and 21 includes: manufacturing, distribution and transport systems; materials handling; 22 marketing and sales techniques; information systems and devices; and research and 23 development. 24 25 Competitive drivers 26 Our description of the competitive drivers is technically referred to in the business literature as 27 Michael Porters Five Competitive Forces. 28 29 • Power of buyers refers to the bargaining power of the supplier. Buyers may be ‘business 30 buyers’ (as in the case of supermarkets buying from food manufacturers) or the ‘ultimate 31 consumers’ (buying from the supermarket) and the influence of each can vary markedly. 32 Few buyers relative to suppliers’ means that it is easier for a buyer to force down prices, 33 dictate quality, and take most of the profit. Buyer power is especially high if it is easy for 34 the buyer to switch between suppliers or a buyer starts to make the product they are buying 35 (‘backward vertical integration’). 36 37 • Power of suppliers is the opposite of buyer power. Powerful suppliers can force prices up, 38 limit quality improvements, and push costs on to buyers. 39 40 • Threat of entrants refers to how difficult it is for a new company to enter an industry. 41 Where entry is difficult existing companies are most likely to benefit because fewer

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1 competitors can mean less competition. To enter an industry and be successful, a new 2 entrant must overcome regulatory hurdles, find access to suppliers and buyers, and be able 3 to configure an efficient supply chain. They must also offer a product or brand that 4 consumers perceive as being different or of better value than the current offerings. 5 6 • Threat of substitutes refers to how difficult it is for buyers to switch between products that 7 offer comparable quality and function but are sold by different industries. Low switching 8 costs can make it difficult for companies to increase price which can dampen profitability 9 and reduce spend available for product development. 10 11 • Competitive rivalry refers to the intensity of competition in an industry and is mediated by 12 the bargaining power of buyers and suppliers, threat of entrants and substitutes. 13 Competitors of a similar size often compete intensely for sales. If entry to the industry is 14 easy then rivalry is intensified. Competition is typically greatest when industry growth is 15 modest and there are few differences between the offerings of competing companies. 16 Intense competition may put downward pressure on price and paradoxically limit 17 companies’ opportunities to innovate, improve and attractiveness to invest. 18 19 Note: The description of the PEST food system drivers is taken from: Johnson G, Scholes K & 20 Whittington R, Exploring Corporate Strategy: Text and Cases. 8th ed. Essex, UK; Pearson 21 Education Limited; 2008, and Viljoen J & Dann S, Strategic Management. 4th ed. Frenchs Forest, 22 Australia; Prentice Hall; 2003. The description of Michael Porters Five Competitive Forces is taken 23 from: Johnson G, Scholes K & Whittington R, Exploring Corporate Strategy: Text and Cases. 8th 24 ed. Essex, UK; Pearson Education Limited; 2008, and Viljoen J & Dann S, Strategic Management. 25 4th ed. Frenchs Forest, Australia; Prentice Hall; 2003, Porter M, How Competitive Forces Shape 26 Strategy. Harvard Bus Rev. 1979;57:137-145, Porter M, The Five Competitive Forces that Shape 27 Strategy. Harvard Bus Rev. 2008;86:58-77, and Kotler P, Brown L, Adam S, Armstrong G. 28 Marketing. 6th ed. Sydney, Australia: Pearson/Prentice Hall; 2004. 29 30 31 32 33 34 35 36 37 38 39 40 41

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1 Supplementary File 3 2 3 The factors IBISWorld take into account to determine the level of competition within an 4 industry. These factors have been taken from: IBISWorld. IBISWorld Home Page on the 5 Internet. Available from: https://www.ibisworld.com/ 6 7 • Market share concentration (concentration is considered high if the top four players 8 account for more than 70% of industry revenue. Medium is 40% to 70%. Low is less 9 than 40%. 10 • Key success factors – these differ by each sub-sector and may include factors such as 11 economies of scale, control of distribution arrangements, and supply contracts in 12 place for key inputs. 13 • Cost structure (e.g. often larger manufacturers have a lower per-unit production 14 costs due to economies of scale). Cost structures vary with each business, an industry 15 cost structure is an estimated average of all companies in that sector. 16 o IBIS consider profit, purchases, wages, depreciation, and other expenses (e.g. 17 promotional, research and development costs) as a proportion of revenue. 18 • They also consider internal competition (e.g. price, product differentiation, and 19 distribution networks) and external competition (e.g. other suppliers of the product, 20 in the case of bread this might be in-store bakeries, hot bread shops, or artisanal 21 bakeries). 22 • Barriers to entry (ease with which a new company can enter a market) high barriers 23 mean it is difficult, and low barriers mean it is easy. 24 • Industry globalisation: the extent of involvement in international operations – 25 including international trade (export offer growth opportunities and import 26 competition whereby foreign producers satisfy domestic demand that local firms 27 would otherwise supply). 28

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