When Sir Keir Starmer took office last July there was no illusion that FMCG policy would take centre stage amidst a cost-of-living crisis and the highly-politicised debate around migration. However, as the Government enters its first full year of office there are plenty of watchouts for the industry \u2013 from an ambitious new Food Strategy to sweeping recycling reforms that could reshape the FMCG sector as we know it.<\/p>\n
As we are all aware business currently faces a difficult economic backdrop; the Chancellor\u2019s Autumn Budget<\/a> did little to lift the spirits of FMCG retailers and manufacturers. A hefty increase in employer National Insurance (NI) contributions from April is set to add an estimated \u00a35bn to annual operational costs, tightening already squeezed profit margins in 2025.<\/p>\n But this is just the tip of the iceberg. The introduction of the Extended Producer Responsibility (EPR) scheme will add yet another \u00a33bn to the sector’s overall financial burden this year \u00a0– all while the Government grapples with the issue of illustrative base fees, leading to concerns amongst multiple material sectors and packaging users who have pointed \u00a0to disproportionate cost increases and market distortions.<\/p>\n All of this is playing a significant role in fuelling consumer inflation, which could explain the Government\u2019s silence on the modest (and surprising) news of UK inflation being downgraded to 2.5% in December. There may be concern in No.11 that taking too much credit now for policy impacts in this space \u00a0\u00a0would leave Rachel Reeves in a tight spot should we see inflation rises later this year when new NI rises and EPR payments begin to take shape.<\/p>\n One thing that was certain when Labour came into office was their ambition to deliver comprehensive, hard-hitting reforms around food.\u00a0 The manifesto\u2019s commitment to ban the sale of high-caffeine energy drinks to under-16s was a rare example of a \u00a0specific intervention in a document that intentionally lacked direct policy commitment, while a consultation to extend the Soft Drinks Industry Levy (SDIL) to milk-based drinks was issued alongside the Autumn Budget.<\/p>\n The cornerstone ambition to deliver a long-term Food Strategy to create a \u2018healthier, fairer and more resilient food system\u2019 – which Steve Reed has committed to publishing\u00a0 in 2025 \u2013 is the culmination of Labour\u2019s commitment to take a more rigid approach to food security and public health.<\/p>\n Of some comfort is Reed\u2019s confirmation that the Strategy will be developed in partnership with industry, which could lead to a balanced approach where higher taxes for HFSS products aren\u2019t viewed by government as the \u2018silver bullet\u2019 to tackle the obesity crisis. Health Secretary Wes Streeting has previously backed<\/a> this approach, suggesting a high tax burden on HFSS products would disproportionately impact poorer families.<\/p>\n However, with the Government focused on revenue raising, the Food Strategy represents a landmark moment in understanding how Labour will marry health outcomes with the cost of living crisis. On timings, it seems likely the Government is keen to get over the EPR hurdle first before facing the next HFSS battle, so while there might be limited progress in H1 \u2013 now is the time for businesses to prepare and align internally on their red lines for future food policy.<\/p>\n As we head into the first half of 2025, all eyes are on the Government\u2019s delivery of a comprehensive Circular Economy Strategy – supported by the unveiling of Defra\u2019s Circular Economy Taskforce in December, chaired by Andrew Morlet, former Chief Executive of the Ellen MacArthur Foundation.<\/p>\n Of particular interest will be the\u00a0 approach taken to Simpler Recycling and the rollout of Deposit Return Schemes in light of major supermarkets urging a delay<\/a> to the 2027 timeline. Still, the Government\u2019s efforts to integrate various waste and resource policies into one cohesive plan is a step in the right direction \u2013 and one that industry has long called for.<\/p>\n But the big question remains: how much long-term vision will the Strategy offer? While the immediate focus will be on delivering the EPR, DRS, and Simpler Recycling reforms, the FMCG sector will be watching closely to see if the Strategy lays the groundwork for a future-focused reuse system.<\/p>\n How soon can we expect a truly circular economy? The answer will likely determine the long-term success of these ambitious plans.<\/p>\n The policy landscape for the FMCG sector in 2025 is shaping up to be complex, unpredictable, and packed with opportunity \u2013 if you know where to look. From \u00a0inflationary pressures to sweeping food policy reforms and circular economy initiatives, it\u2019s clear that 2025 will be a pivotal year for the sector. Navigating these changes will require strategic foresight, industry collaboration, and a clear understanding of how new policies will impact your bottom line.<\/p>\n To speak to our\u00a0<\/em>FMCG sector specialists<\/em><\/a>\u00a0about how we can support your business during a year of significant policy change, please contact Michael Broughton (<\/em>michael.broughton@grayling.com<\/em><\/a>).<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"When Sir Keir Starmer took office last July there was no illusion that FMCG policy would take centre stage amidst a cost-of-living crisis and the highly-politicised debate around migration. However, as the Government enters its first full year of office there are plenty of watchouts for the industry \u2013 from an ambitious new Food Strategy…","protected":false},"author":91,"featured_media":64811,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[669,673],"tags":[651,726],"class_list":["post-64810","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uk-news","category-views-blogs","tag-fmcg","tag-public-affairs-pl"],"acf":[],"yoast_head":"\nNational Food Strategy<\/strong><\/h5>\n
Circular Economy Strategy<\/strong><\/h5>\n
The Bottom Line for FMCG<\/strong><\/h5>\n