Morrisons hails progress on reformulation as investors call out exposure to unhealthy sales
A group of institutional investors representing $1.1trn in funds maintain written to Morrisons Chairman Andrew Higginson to call on the corporate to raise sales of more healthy meals and drink poducts.
The investors consist of NEST, Man’s & St Thomas’ Foundation and JO Hambro Capital Management and the letter used to be coordinated by ShareAction. They argue that Morrisons’ most modern healthy eating strategy doesn’t poke a long way adequate.
Morrisons has build of abode a goal to assemble bigger the preference of more healthy own-mark products to 65% of all own-mark lines by 2025. But Ignacio Vazquez, Senior Manager at ShareAction, mentioned the retailer need to be using sales – no longer the preference of products – as a measure and working across all product lines, no longer glorious own designate.
“Merchants are looking out to better know the formulation supermarkets are taking duty for his or her tall influence on public effectively being,” Vazquez argued.
The letter comes sooner than Morrisons’ AGM as of late (10 June). Shareholders might perchance per chance perchance additionally no longer be ready to table questions this year, so the letter particularly calls on the corporate to enlighten share of complete meals and drink sales of more healthy products; submit an extended-term commitment to ‘seriously’ grow that share; and consist of a progress legend on delivery in its annual targets from 2022 onwards.
Morrisons: A laggard on effectively being strategy?
Morrisons represents 10% of the grocery market and is without doubt one of the most biggest listed supermarket operators in the UK, alongside Tesco and Sainsbury’s.
ShareAction highlighted that of the three companies, Morrisons is the thoroughly one no longer to position of abode sales-basically basically based mostly effectively being targets. Nowadays, Tesco bowed to investor rigidity to create so after ShareAction filed the UK’s first ever shareholder resolution on effectively being factors at a supermarket.
A legend from Procure admission to to Nutrition additionally stumbled on Morrisons lagged its opponents on effectively being factors. The legend assessed public commitments and actions on factors esteem nutrient profiling, product formulation, to blame marketing and labelling. Morrisons scored 20% for its efficiency on effectively being factors, below Sainsbury’s on 35%, Marks & Spencer on 33%, the Co-op and Tesco both on 30% and Lidl on 25%.
A separate legend from the Food Foundation stumbled on that ‘encouraging healthy diets’ is Morrisons’ weakest space of efficiency out of 10 key ESG issues for the supermarket sector.
ShareAction argued that this efficiency represents a threat to the business, as regulatory and user inclinations in direction of more healthy diets are accelerating.
“Questions stay regarding the Company’s strategy and overall exposure to rising regulatory rigidity and user inclinations supporting more healthy diets.” Vazquez beneficial FoodNavigator: “An October 2020 legend from ShareAction great that 85% of UK customers now legend actively attempting to toughen their food regimen when having a explore, so there might perchance be a actual case that concentrated on more healthy sales will aid the corporate to meet rising user expectations.”
“For this cause, we are overjoyed to be joined by investors as of late in calling on the corporate to apply varied main listed UK supermarkets in disclosing and committing to grow the proportion of its sales made of more healthy meals and drink products. We hope that Morrison’s Board will carry this opportunity to assemble on its social duty credentials whereas additionally demonstrating to its shareholders that it is accurately managing the rising monetary dangers and alternatives on this space.”
Morrisons ‘committed’ to supporting healthy choices
A spokesperson for Morrisons beneficial FoodNavigator that the supermarket group is ‘committed’ to promoting more healthy choices and ‘supportive’ of efficiency targets and measurements.
“We’re committed to serving to our customers assemble more healthy choices and we are supportive of measuring efficiency and setting meaningful targets. We already submit the proportion of our own-mark products that are classed as healthy and maintain a commitment to assemble bigger this,” the spokesperson great.
The supermarket group, which operates a vertically integrated provide chain and produces many of its own designate lines itself, highlighted progress it has made across a preference of areas – particularly reformulation.
In 2020 the corporate removed 8.6bn energy, 832 tonnes of sugar and 44 tonnes of salt from its own mark by diagram of reformulation work. These efforts maintain continued apace this year, with a additional 5.8bn energy, 504 tonnes of sugar and 42.7 tonnes of salt taken out of own designate lines.
The company additionally these days launched a effectively being targeted own designate vary, Novel Nourish, which includes 54 lines. Morrisons plans to grow the mark to round 100 lines in the future.
Talking on the time of the originate, Tessa Callaghan, Head of Get Trace & Originate, mentioned: “Nourish is launching at a time when general effectively being and immunity – no longer glorious healthy eating view – is on the head of our customers’ agendas, even more so this year. We truly mediate that the vary makes healthy eating no longer glorious doubtless, but additionally tasty and affordable”
The supermarket has additionally made progress on dietary labelling with the January originate of its own Extra healthy Living icon. This methodology depends totally on a nutrient profiling funnel mannequin, combining the UK net page net page visitors lights, French NutriScore and Australian Health Huge name models. Here’s then overlaid with net page net page visitors gentle labels. Currently, Morrisons mentioned 11% of own mark lines poke the mannequin, which is being added to a rising preference of products.
By terminate of 2021, Morrisons might perchance per chance perchance maintain removed sketch characters from all young americans’s products that are HFSS.
Vazquez conceded Morrisons has ‘made a diffusion of progress’ on ‘some aspects’ of its effectively being strategy, together with own designate reformulation.
On the replace hand, the ShareAction manager beneficial FoodNavigator: “In difference, there might perchance be exiguous facts on whether or no longer, and if that is the case how, Morrisons’ marketing and advertising strategy supports healthy eating. Here’s predominant because enhancements in the preference of healthy own-mark products will thoroughly consequence particularly public effectively being outcomes if sales of these sorts are additionally elevated.
“Morrisons currently has no targets to grow these sales, whereas Tesco (65% by 2025), Sainsbury’s (45% by 2020, post-2020 targets being build of abode imminently), M&S (50% by 2022) and ALDI (70% by 2025) maintain all build of abode targets to grow the sales of more healthy meals and drink products.
“Neither ShareAction nor the investors supporting this marketing campaign are looking out to dictate how Morrisons might perchance per chance perchance maintain to quiet create these targets – these are operational choices which we disappear on the discretion of management. But certainly we all know that the sing of particular dietary product labelling, store structure, pricing and in-store promotions and exterior marketing all play a job in influencing user buying choices and these will even be life like tools for supermarkets having a explore to raise sales of healthy products.”