1

The Labelling Schemeon Nutrition Information

Background information, Preparatory work and

Way forward

August 2005

2

Outline

Results of the public consultation exercise

Results of the Regulatory Impact Assessment (RIA)

Revised proposal

3

Aims of Nutrition Labelling

Facilitate consumers in making healthy food choices;

Encourage food manufacturers to apply sound nutrition principles in the formulation of foods which would benefit public health; and

Regulate misleading or deceptive labels and claims on nutrition information.

4

Original Proposal(Consultation document released in Nov 2003)

Energy plus 9 core nutrients:

Protein

Carbohydrate

Total Fat

Saturated Fat

Sodium

Sugars

Cholesterol

Dietary fibre

Calcium

5

Phase I

Labelling of prepackaged food with nutrient-related claims and / or any nutrition labels

Phase II

All prepackaged food (except exempted items)

Grace periodPhase I: 2 years after enactmentPhase II: 3 years after the implementation of Phase I

Original Proposal(Consultation document released in Nov 2003)

6

Public Consultation

7

Public Consultation

Public consultation period - Nov 2003 to Jan 2004

Two public forums

Subsequently - District Councils (DC) Meetings; and

Technical meetings with the trade

8

Results of Public Consultation

Received about 180 written submissions

Majority (74%) supported the implementation of mandatory nutrition labelling scheme

Other comments (13%) include:Implementing voluntary nutrition labelling scheme

Accepting nutrition labels from source country

Regulating only prepackaged foods with nutrient-related claims

Reducing the scope of the scheme

9

The 15 DCs we visited generally supported our proposal;

Views expressed in two-thirds of the DCs suggesting speeding up implementation; and

Some DCs were concerned about compliance costs.

Results of Public Consultation (Cont’d)

10

95% supported the Government’s regulatory measures on nutrition labelling;

87% considered nutrition information important;

81% said they would use nutrition information if all prepackaged food would be labelled accordingly; and

95% supported standardising the format of nutrition labels.

Opinion Survey (January 2004)

11

Regulatory Impact Assessment

12

Regulatory Impact Assessment (RIA)

In response to the trade’s request and public opinion, the Administration commissioned a consultant to conduct a Regulatory Impact Assessment.

Objective

To study the overall costs and benefits of introducing nutrition labelling to the society, including the potential benefits of lowering the overall health costs.

13

OptionsOption Phase I Approach Number of nutrients

I

Labelling of prepackaged food with nutrient-related claim only

energy + 9 core nutrients

II energy + 7 core nutrients

III energy + 5 core nutrients

IV energy + 3 core nutrients

V

Labelling of prepackaged food with nutrient-related claim and / or any nutrition labels

energy + 9 core nutrients

VI energy + 7 core nutrients

VII energy + 5 core nutrients

VIII energy + 3 core nutrients

OriginalProposal

14

Options (Cont’d)Option Core Nutrients

I and V energy, protein, carbohydrate, total fat, saturated fat, cholesterol, sugars, sodium, dietary fibre, calcium.

II and VI energy, protein, carbohydrate, total fat, saturated fat, sodium, cholesterol, sugars.

III and VII energy, protein, carbohydrate, total fat, saturated fat, sodium.

IV and VIII energy, protein, carbohydrate, total fat.

15

Economic Impacts(i.e., the costs for complying with the proposed scheme)

Testing costs

Relabelling costs

Impact of lost products

Government costs (including enforcement, education and promotion)

Trade cost*

* The percentages of prepackaged foods requiring relabelling and/or testing under various options (according to the market survey, currently there are approximately 22,000 product lines in the local market):

Most stringent options (I and V) >99% ; Most lenient options (IIV and VIII) >75%

16

Benefits of the Proposed SchemeNutrient Nutrient-related Disease

Energy Obesity

Total fat Obesity, Cardiovascular diseases

Protein Renal diseases

Carbohydrate Obesity, Diabetes

Sodium Hypertension, Renal diseases, Stomach Cancer

Saturated fat Cardiovascular diseases, Diabetes, Breast cancer

Cholesterol Cardiovascular diseases

Sugars Obesity, Diabetes, Colorectal cancer

Dietary fibre Diabetes, Cardiovascular diseases, Hypercholesterolemia, Colorectal cancer

Calcium Osteoporosis, Colorectal cancer

17

Benefits of the Proposed Scheme (cont.’)

Quantifying the Reduction in Nutrition-related Diseases:

The proportion of food consumed that is likely to be prepackaged

The likely changes in the proportion of consumers who would read and use nutrition labels

Percentage of the population who would be affected by a particular nutrient

Quantifying the Financial Benefits:

Savings from avoided public hospital admissions

Corresponding saving from General Practitioner visits and medicines associated with each of the nutrition-related conditions

Savings from a reduction in lost productivity due to hospital admissions

Premature deaths avoided due to a reduction in nutrition-related diseases

18

Cost-Benefit Analysis –Trade Costs

After fully implementing the proposed nutrition labelling scheme, for every HK$100 spent on prepackaged foods, there will be less than HK$1 increase in food price if the trade costs is totally transferred to consumers.

19

A number of niche products with low sales revenue and

profit might cease to be imported, which might amount

to between 5% and 10% of product variety* on sale in

Hong Kong.

If the most stringent option (I or V) is implemented, up to

191 SMEs (less than 1% involved in the import and

retail of food products) might be significantly affected.

* Currently, there are approximately 22,000 prepackaged food product lines in the local market

Cost-Benefit Analysis –Economic Costs

20

Depending on the option to be implemented, the total benefits accrued over a 20-year period range from HK$ 800 million to 11,000 million

Cost-Benefit Analysis –Economic Benefits

21

Cost-Benefit Analysis

Conclusion 1

The net benefits increase as the number of core nutrients increases.

Conclusion 2

With the exception of the options to regulate only energy plus 3 core nutrients, all the other options would present net economic benefits to Hong Kong.

22

The Latest Proposal

23

Our Latest ProposalFactors for Considerations -

Local public health situation

Related Codex Guidelines and International practices

Comments and suggestions collected from the public consultation and technical meetings with the trade

Results of the Public Opinion Survey

Results of the RIA Study

24

Our Latest Proposal

Phase ILabelling of prepackaged food with claims only;

Energy plus 5 core nutrients

(protein, carbohydrate, total fat, saturated fat, sodium); and

A 2-year grace period before implementing Phase I.

25

Phase IIAll prepackaged food, except those exempted;

Energy plus 9 core nutrients

(protein, carbohydrate, total fat, saturated fat, sodium, cholesterol, sugars, dietary fibre, calcium); and

Phase II will be implemented 2 years after the implementation of Phase I.

Our Revised Proposal (Cont’d)

26

Trade and Economic Costs

Phase I initial trade cost = HK$ 38 million

Phase II initial trade cost = HK$ 202 million (for testing and relabelling of prepackaged food affected by Phase II)

If the trade cost is totally transferred to consumers, for every HK$100 spent on prepackaged foods, there will be less than HK$1 increase in food price

The total trade cost and economic cost# accrued over a 20-year period are estimated to be HK$ 1,689 million and HK$ 1,939 million respectively.

Under the worst-case scenario, up to 191 SMEs (less than 1% involved in the import and retail of food products) might be significantly affected.

Latest Proposal –Cost & Benefit Analysis

# Economic cost Includes trade cost; all costs are Net Present Value (NPV).

27

Economic Benefits

Annual maximum benefits

Phase I ~ HK$ 250 million

Phase II ~ HK$ 1,540 million

After full implementation (i.e., Phase I + II) ~ HK$ 1,790 million

The total benefits# accrued over a 20-year period is estimated to be HK$ 10,500 million.

Latest Proposal –Cost & Benefit Analysis

Figures of benefits are Net Present Value (NPV)

28

The total net benefits1 accrued over a 20-year period is estimated to be HK$ 8,570 million#.

Latest Proposal –Cost & Benefit Analysis

1 Net benefits = Benefits – Economic Costs

# Figures of benefits are Net Present Value (NPV)

29

JustificationsStriking the right balance between achieving our long-term public health objectives and helping the trade in adapting to the changes in the short run.

Reducing Phase I requirementsEnergy plus 5 core nutrients

Regulating only prepackaged foods with nutrient-related claims

Speeding up Phase II implementationPhase II will be implemented two years after the implementation of Phase I

30

Justifications (cont.’)The revised proposal will present substantial net benefits to Hong Kong through savings in health care costs, avoided productivity losses and reduction of premature deaths.

31

Next StepsDraft the legislation; aim to introduce the legislative amendments to the LegCo in 2006

Continue dialogue with the trade and the relevant professionals

Develop guidelines for implementation and reference testing methods

Establish a set of local Nutrient Reference Values for nutrition labelling purposes

Strengthen public education

32

- END -