Consumer Confidence – a Key Component for a Successful Food Industry

SPEECH/04/157

David BYRNE

European Commissioner for Health and Consumer Protection

Consumer Confidence – A key component for a successful food industry

UK Food and Drink Federation

London, 25 March 2004 Introduction President, Ladies and Gentlemen I am delighted to have been invited to address this distinguished audience tonight. Tonight I want to touch on some of the recent developments in European food legislation – and specifically those concerned with consumer information and how this links into the broader European agenda to improve the health of our citizens. I will also mention the pressing problem of rising levels of obesity amongst European citizens.

Consumers versus industry? But first I would like to say just a few words about the fundamental question of the relationship between industry and consumers. Last month I was asked to speak to a legal forum in Brussels on the subject of “the balance between consumer protection, and legitimate food industry and trade interests”. Let’s pause and think for a moment. Does this not strike a jarring note? It perhaps implies that consumer protection on the one hand and the food industry and trade interests on the other are somehow on opposite sides of the fence. That they are automatically in opposition. That consumer interests can only be satisfied to the detriment of industry interests. I don’t believe this is true. It is a mistake to take the narrow view that high consumer protection standards simply amount to a cost or a burden on the food industry. I want to encourage a more enlightened and holistic approach – one that recognises that, contrary to being in opposition, consumer and business interests have much in common and should work in tandem. This kind of illusory contradiction is repeated across the spectrum of issues for which I have responsibility. In all those areas related to consumers, food safety and health, my main objective is the setting up of a framework through which improving consumer confidence produces a win-win situation for both industry and the consumer. If consumers have confidence in the products they purchase, more of that product will be bought.

Unfair commercial practices The absence of consumer confidence is particularly evident when it comes to cross- border purchases. In this regard, we are making significant efforts to improve the functioning of the single market by promoting measures to bolster the confidence of consumers in the cross-border purchase of goods and services. The Commission’s proposal for a directive on Unfair Commercial Practices is a case in point. It is scheduled for first reading in Parliament shortly. Currently a wide range of divergent national rules imposes costs, creates uncertainty and generally acts as a disincentive for businesses to seek wider markets. Our surveys show that businesses rated these problems as more significant than language barriers.

2 And, the results of our impact assessment revealed that consumers were put off buying goods and services from other Member States because of uncertainty about standards of consumer protection rather than from any perception of lower standards. Our new proposal has two objectives. First – ensuring that consumers do not suffer unfair treatment – such as misleading or aggressive behaviour. Second – and just as important – creating a framework within which legitimate businesses can market across the E.U. without having to change their business strategies or incur excessive costs. These objectives are mutually reinforcing. There is a big prize at stake here for both businesses and consumers by enabling the market to function properly through effectively removing internal barriers and obstacles. In addition the adoption of the Unfair Commercial Practices Directive will allow us to repeal some of the existing sectoral legislation on Consumer Protection The only losers from our approach will be the minority of dishonest traders who do so much damage by eroding consumer confidence and the image of business in general.

Prevention lowers heath costs Let me broaden the issue a little further. We often come across a perceived trade-off between costs and benefits in the public health domain. Health expenditure is all- too-often viewed as a burden on national budgets rather than an investment for the future which can deliver real economic benefits. Our health is our wealth. The link between positive population health and economic wealth and productivity in an ageing society is becoming crystal clear. Derek Wanless’ recent report confirmed that investing in health promotion and prevention are essential and cost-effective economic policies. Targeting avoidable conditions such as obesity, cancer, heart disease and diabetes are as vital to wider economic productivity, as they are to tight health services budgets. The mobilisation of public health prevention in the political mainstream is underlined by the fact that this report is addressed jointly to the Prime Minister, the Chancellor of the Exchequer and the Health Secretary. There is major change underway in how public health is viewed in the economic context across Europe, and it is crucial that all stakeholders adapt quickly.

Consumer confidence – food Allow me now to turn to the subject of food law – which is of course central to the interests of your Federation. Consumer confidence in our food supply is certainly more sensitive, more fragile and more volatile than in most other areas of industry. The food crises of recent years have left their mark on the food industry as a whole. Consumer confidence is clearly a precious and vital commodity that must be nurtured – and must never be taken for granted. As I said at the beginning, consumer information is vital and ultimately benefits industry, as consumers only purchase products in which they have confidence. This is all the more important for food safety.

3 In all we have achieved, my aim has been to ensure that the regulatory framework is balanced. The Spring European Council, taking place today and tomorrow, will give new impetus to the Lisbon Agenda on competitiveness and growth. Strengthening consumer confidence plays a key role in that process. In order to improve lawmaking, the Commission has committed itself to an integrated approach to impact assessment analysing in particular the economic, competitive and administrative burdens. The costs and benefits of proposed measures need to be properly evaluated. Against this background it is essential that citizens and stakeholders are always invited to contribute to our ideas and initiatives, from the beginning. Such contributions have a great influence on the final proposals and ensure that the whole policy making process is transparent and proportionate. You will of course be aware that this Commission has placed a heavy emphasis on improving all aspects of European food safety. I am pleased to say that the broad framework of the new European Food Safety system is now in place. The implementation of our farm-to fork approach to food safety should pay dividends to both consumers and the food industry for many years to come. I must however stress that this does not mean that food risks can be completely eliminated or that food scares will soon be a thing of the past. Rather it means that we will be much better equipped to identify and deal with any future emerging food risks with maximum speed and efficiency. As an example let me just mention the establishment of the European Food Safety Authority (EFSA), which contributes to increasing consumer confidence. As the tool for a proper scientific risk assessment it, at the same time, provides more certainty for economic operators. I recognise that consumer confidence comes at a price. The investments that need to be made to protect the food chain and sustain consumer confidence can be significant. But let us not forget – the cost of dashing consumer confidence is far greater. In that context, allow me to say a word about self-regulation. I know that in the UK self-regulation is key to addressing those issues in the area of consumer protection and health. However, if we look from a broader European perspective, the situation in Member States differs greatly. In most of them, self-regulation has not yielded positive results. As I have outlined above, experience has taught us that, in particular in the area of food safety, it is of common benefit for consumers and industry alike to have a stable legal framework. But in other areas self-regulation can work. However, often the weakness of self-regulation is a lack of monitoring and enforcement. Industry can and should address this and thereby enhance the role of self-regulation as an effective tool in consumer confidence. Initiatives such as the Food Safety Platform set up at the CIAA can play a valuable role in this regard.

Nutrition and Health As I mentioned earlier, obesity – with all its attendant health problems – has emerged as one of the biggest challenges facing individuals and society. In addition to the threat of increased suffering and ill-health of individual citizens, obesity signals a massive economic threat if current trends are allowed to continue and spiral out of control.

4 Health spending would go through the roof. Productive life years would be significantly reduced. And life expectancy could actually start to fall. The active involvement of a range of key stakeholders is essential for the development of clear, understandable, motivational messages to consumers to encourage positive behavioural change. In this area there are no easy solutions. Legislation alone cannot combat obesity. We need co-ordinated, multi-sectoral and population-wide strategies. The task ahead of us is huge. The European institutions have a role to play. National governments have a role to play. And the food industry has a role to play. And individuals have to make lifestyle changes. At European level, last December’s Council conclusions on healthy lifestyles recognise the major and growing contribution of unhealthy lifestyles to the overall disease burden. The current Irish presidency of the EU has identified the prevention of cardiovascular diseases and obesity as specific priorities. Within our competences, the Commission has undertaken a wide range of projects under the Health Promotion Programme and the Health Monitoring Programme. And the new Public Health Programme provides the framework and the means to take forward important work in the area of nutrition. The establishment of a Nutrition and Physical Activity network with the Member States will pave the way for more coherent strategies with an emphasis on obesity prevention. It will also facilitate the sharing of ideas and the transfer of best practices throughout the Community. The WHO Global Strategy on Nutrition, which will be adopted in the near future, highlights the need to involve the private sector in the promotion of healthy nutrition and physical activity. I very much support this view.

Labelling If consumers are to make informed choices about the food they consume then we need to consider the information on which consumers base their food choices – and how we can facilitate consumer choice in pursuit of dietary needs and goals. Consumers need to be adequately informed about food so that they can make their choices based on the best information available. With this aim in mind, the Commission is pursuing three important and related initiatives. First, the Commission adopted last summer a proposal on food claims, covering both health and nutrition claims. This foresees a science-based validation, by EFSA, of food claims to ensure that every such claim can be properly justified. At the moment, many claims are difficult to substantiate – and some are misleading or indeed even false. The regulation will protect consumers, improve the free movement of goods, increase the legal security of operators and prevent abusive claims, thus ensuring fair competition.

5 It will result in a more liberal environment for claims in labelling and advertising. And, for the first time, disease-related messages - e.g. calcium is good for bone development, currently prohibited by EU legislation – will be allowed provided they can be scientifically substantiated and authorised at EU level, following a thorough assessment by the European Food Safety Authority. Some interests have tried to pretend that this proposal would seriously inhibit advertising of food. This is quite untrue. Let me simply say this. The proposal covers only health and nutritional claims on foods for human consumption. It does not impair the food industry’s or the advertising industry’s role in informing the public. It aims to prevent misinformation, not information. In the course of the ongoing co-decision process I am in close contact with the Council, European Parliament and stakeholders in order to find reasonable compromises for a balanced regulatory framework for consumers and industry alike. The second initiative is a proposal on the addition of vitamins and minerals to foods. This aims to ensure a high level of consumer protection and to harmonise divergent national rules that are currently an obstacle to the free circulation of goods. Third, we are currently preparing a proposal, which we hope to adopt in the summer, to revise the nutrition labelling rules. Today, the provision of basic nutritional information on food is neither systematic nor easily understood by consumers. Here again broad consultations with stakeholders and Member States are taking place and my services are evaluating the impact of such legislation on industry, including SMEs. This analysis will be taken into account before drafting the actual proposal. Simple, easily understood information on a few key elements such as energy (total calorie content will be mentioned), fat (including saturated fat), carbohydrates (including sugar) and salt is what is being examined. This is much less than what is requested in the United States on mandatory nutritional labelling where compulsory information needs to be given on 14 nutrients (e.g. vitamin A, trans-fatty acids, fibre). The European approach will be close to the Codex Alimentarius standards. The Commission thinks that the limitation to key nutritional elements will be more likely to appeal to both consumers and industry. Such a measure would, I believe, enable consumers to have greater control over what they choose to eat. I am aware that your President John Sunderland has been to the fore in mobilising attention to the need for a comprehensive approach to tackle the challenge of obesity. I was struck by his call that some nutritional labelling information should be provided also on menus in restaurants and take-aways. This is an interesting idea for national administrations to take up. I very much hope that the food industry will respond positively to these challenges and play an active role in supporting the common drive for a healthier European society. As I said earlier, tackling obesity has to be part of a multifaceted and coordinated strategy and the food industry by itself cannot solve the problem. But by taking a proactive approach you can demonstrate your willingness to be part of the solution.

6 Conclusion Ladies and Gentlemen, I encourage you to take a bold approach to the issues I have mentioned tonight. New initiatives such as the provision of more reliable and comprehensive information to consumers can and should have a positive effect on the food industry and its relationship with consumers. Contented consumers and a prosperous food industry go hand in hand. Thank you – and bon appétit.