US investment into UK food and drink under threat

While major US companies such as PepsiCo, Mars and Mondelēz have invested hundreds of millions into the UK, a new report from the BritishAmerican Business (BAB) warns the nation could see future pull backs.

Food and drink manufacturing contributes £42 billion to the UK economy and supports nearly half a million jobs; but overlapping regulatory changes are driving up costs and creating uncertainty across the food and drink sector.

This includes new regulations around HFSS, proposed changes to the Nutrient Profiling Model (NPM), and a range of environmental, packaging and labelling requirements.

As a wave of unaligned regulation comes in thick and fast, BAB says the country risks losing it allure with US-headquartered giants who are tired of moving goal posts.

Between 2022 and 2025, PepsiCo invested £35 million as part of a commitment to drive up healthier snack sales in the UK. However, businesses are worried that changes to the NPM, which is a key benchmark within the UK’s HFSS framework, could mean revisiting work already undertaken and additional costs.

In the report, BAB urges that any changes to NPM should be informed by robust evidence and a full evaluation of existing HFSS measures; questions marks – including around free sugars measurements – must also be worked out first to ensure a consistent approach.

Although the transatlantic trade association acknowledges a need for both health and environmental action, it urges the UK Government to consider the cumulative burden of regulation, particularly at a time of such volatility.

“The UK’s food and drink sector is one of the country’s economic success stories and an important part of the transatlantic relationship. It supports jobs and attracts significant investment from US companies,” said BAB CEO Duncan Edwards.

“The UK government has ambitious objectives on growth, public health and sustainability, and business shares those goals. But there is a growing risk that policies developed in isolation create unintended consequences when layered on top of one another. Competitiveness must remain part of the conversation.

“Investment decisions are ultimately about confidence. If regulatory change becomes too complex, unpredictable or costly, the UK risks making itself less attractive for the very investment that supports jobs, innovation and growth.”

Similar thoughts were aired by Mondelēz boss Dirk van de Put on a recent BBC podcast, who said the business’ £40 million investment into reformulating for HFSS has been poured “down the drain”. He added that shaky UK regulations are raising doubts in his head over whether the company would invest into the UK in the future.

The BritishAmerican Business is a transatlantic trade association incorporating the British-American Chamber of Commerce in the US and the American Chamber of Commerce in the UK.