Research reveals hidden economic hit for food manufacturers due to health policy overhaul

New research from Oxford Economics¹ reveals the hidden multi-million-pound impact of the Department of Health and Social Care’s (DHSC) proposed changes to the Nutrient Profiling Model (NPM) – the health score given to food and drink to decide whether products are subject to advertising and promotion restrictions. The research was undertaken with some of the UK’s largest food and drink manufacturers, representing around 15,000 products in scope of the regulations.

True cost to business far exceeds Government estimates

The report finds that the average one-off costs of the policy to manufacturers could be as much as 50x more than the figure in government’s own Impact Assessment². Oxford Economics’ report calculates that proposed changes to the NPM will cost food and drink manufacturers £2,812 per product, compared to government’s estimate of just £53 per product.

This significant gap reflects an underestimation of the time required to interpret and implement these new, complex changes across company product ranges, alongside additional costs, such as updating IT systems to reflect the different requirements of the revised NPM. For example, the government’s Impact Assessment assumes that each manufacturer requires just 8.2 hours in total to familiarise themselves with the regulatory changes and share that knowledge internally. This assumes that one production manager at a head office reads and reviews a 10,000 word document once and then shares this knowledge with technicians in just 90 minutes.

The food manufacturers surveyed will also lose £10m each on average in sunk investment costs spent developing healthier products to support existing regulations, because many of these new products will now be re-classified as ‘less healthy’ under the proposals.

Government’s Impact Assessment assumes that none of the business costs will be passed on to consumers. However, with the industry already under significant strain due to the war in Iran and other regulatory pressures, food and drink manufacturers have very limited ability to absorb further costs. The Food and Drink Federation predicts that food inflation could reach 9-10%.

Proposals risk reducing choice for consumers

The research also reveals that government has significantly underestimated the number of products impacted. The findings suggest that there would be a 40% increase in products that couldn’t be advertised or promoted, nearly double the government’s estimate of 22%.

Food and drink ranging from high fibre breakfast cereals and fruit yoghurts, through to healthier swaps like lower sugar cakes and lower salt crisps would fail the proposed NPM and be classified as ‘less healthy’.

Food manufacturers expect to delist more than 1 in 10³ of their products as a result of the proposals. This risks reducing the availability of accessible ‘swap’ options that support healthier choices, which risks setting back overall progress towards healthier diets.

However, research from Nesta, the research and innovation foundation, shows that if shoppers make many small changes (for example by swapping to healthier alternatives like those products designed to meet the current NPM) this could reduce calorie consumption by 8.5% and halve obesity rates in the UK in five years⁴.

Uncertainty around the policy’s real-world health impact

The report also highlights the significant uncertainty around the estimated health benefits in the Impact Assessment. For example, DHSC’s estimated calorie reductions for promotion restrictions are based on sales of ‘less healthy’ products reducing by between 16%-90%. The use of such a wide range underlines the significant lack of certainty around the policy’s real-world impact on calorie consumption.

Kate Halliwell, Chief Scientific Officer, The Food and Drink Federation (FDF), said:

“This analysis shows DHSC has significantly underestimated both the cost and impact of its proposals on food manufacturers, while relying on limited evidence to support its health claims.

“By contrast, there are early indications that the current advertising and promotion regulations, the most recent of which came into force this year, are having an effect on what consumers are buying⁵.

“At a time when food businesses are already under intense cost pressure, these proposals will add further strain on the sector and, perversely, risk removing from shop shelves many of the products that help consumers make healthier choices.

“We urge government to work with industry on a more proportionate approach that protects consumer access to healthier options while promoting healthier diets.”

Alex Stewart, Associate Director, Oxford Economics, said:

“Our analysis of the government’s impact assessment suggests costs to businesses are being significantly underestimated, while the health impacts are unclear. This reinforces the importance of post-implementation evaluation of existing policies and gathering further proof points, such as those from our analysis, to inform the final impact assessment.”

Driving progress towards healthier diets

Food manufacturers have made significant progress in helping people towards healthier diets. In the last five years FDF members have cut the sugar (19%), salt (18%), and calories (17%) they contribute to the British grocery market by nearly a fifth⁶ and improved the NPM score of their products by 13%⁷.

The latest phase of the advertising and promotion restrictions only came into force in January 2026. It’s therefore too soon to evaluate how effective they have been.

FDF is calling on government to rethink its plans to change the NPM, and instead bring forward mandatory reporting of healthier food sales across the whole food sector. This would require companies to publish standardised, consistent data, creating a transparent way of measuring progress towards a healthier food system. This is a novel approach which industry agrees will continue to incentivise companies to develop more, healthier options for shoppers, while also supporting everyone’s ability to evaluate health policies effectively.

Notes to editors

1. Oxford Economics: A critical review of HMG’s impact assessment on shifting to NPM 2018 for promotion and advertising restrictions, commissioned by the Food and Drink Federation
2. Impact assessment of applying the new nutrient profile model to promotions and advertising
3. When asked ‘For newly “less healthy” products under NPM 2018, how do you expect your organisation to respond?’ 12% answered ‘delist or withdraw’.
4. Source: Nesta