Kellogg's has lost a High Court challenge against the Government over incoming food regulations that will cost the manufacturer an estimated millions of pounds in lost sales.
The Coco Pops and All-Bran maker brought legal action against the Department of Health and Social Care (DHSC) over new regulations due to come into effect this October.
Part of the regulations will restrict where certain types of food are permitted to be displayed within supermarkets or on their websites, while another part coming into force next year will ban multi-buy promotions of foods deemed high in fat, sugar or salt (HFSS).
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In-store promotion of HFSS foods will be limited, meaning they will not be allowed to be featured in high-profile locations such as checkouts, shop entrances and aisle ends. At a hearing in April, Kellogg's argued the regulations are unlawful because the nutritional value of breakfast cereals will be assessed by their dry weight as sold, rather than how they are eaten - usually with milk.
The manufacturer's barrister Tom Hickman QC said: "It is self-evident that breakfast cereals are not eaten dry. They are not designed to be eaten in that way, they are not marketed to be eaten in that way and they are not in practice eaten that way."
But in a judgment on Monday, Mr Justice Linden dismissed the claim, finding the issue of how cereals are consumed and should be measured had been considered and resolved in consultations. He ruled: "In my judgment, the true position is the fact that, in their detailed responses, none of the breakfast cereal manufacturers raised the issue during the consultation period of more than a year tends to support the view that the 'as sold versus as consumed' issue had long since been resolved, was well understood and was accepted in the sector."
Mr Justice Linden said there is "no dispute" that breakfast cereals can be part of a healthy diet. He continued: "But the argument that there are nutritional benefits to the consumption of a given breakfast cereal does not affect the point that if it contains excess fat, sugar or salt, that feature of the product is adverse to a child's health.
"Still less is it an argument against seeking to encourage, for health-related reasons, the promotion and consumption of breakfast cereals which contain less fat, sugar or salt.
"Nor does mixing a breakfast cereal which is high in, for example, sugar, with milk alter the fact that it is high in sugar."
The judge said 54.7% of Kellogg's current cereals will be classed as less healthy under the new regulations. He added that 30% of Kellogg's HFSS products are sold through location promotions - deals with retailers to place products in high-profile places, as well as promotions on websites.
Kellogg's UK's revenue and channel director previously estimated that 2.5 million kilogrammes of sales will be lost as a result of restrictions on these location promotions - counting for approximately £5 million in annual profits, the judge said.
Mr Justice Linden said there is an "irony" to this evidence, adding "the adverse impact on Kellogg's which he predicted directly correlates with what the Government is trying to achieve". During the hearing, the judge was told that 100g of Frosties contains 37g of sugar.
Mr Justice Linden wrote: "The suggestion that Frosties should not be regarded as a less healthy product because of the nutritional value of the milk with which they may be consumed is surprising."
A DHSC spokesman said: "We strongly welcome today's judgment. The Government is committed to tackling obesity, which is the second biggest cause of cancer in the UK and costs the NHS billions of pounds a year.
"The judgment backs the Government's approach to restricting the promotion of less healthy breakfast cereals, which contribute a significant amount of sugar to children's diets.
"Location promotion restrictions will come into force in October 2022 and are expected to deliver over £57 billion of health benefits. Together with the volume price restrictions, these changes will protect children up and down the country from products high in saturated fat, sugar or salt."
Kellogg UK's managing director, Chris Silcock, said the firm is "disappointed" with the ruling. He continued: "While disappointed with this judgment, we respect the decision of the courts and do not intend to appeal. We still believe that it is important that cereals are measured in a way which reflects how most people eat them - with milk.
"We also remain concerned at the way the Government introduced these regulations - which, in our view, was without proper Parliamentary scrutiny.
"By restricting the placement of items in supermarkets, people face less choice and potentially higher prices. That's why, in the midst of a cost-of-living crisis, we would strongly urge the Government to rethink these regulations and put the consumer first."
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