1 The Labelling Scheme on 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 period Phase I: 2 years after enactment Phase II: 3 years after the implementation of Phase I Original Proposal (Consultation document released in Nov 2003)

6 Public Consultation

7 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 Options OptionPhase I ApproachNumber of nutrients I Labelling of prepackaged food with nutrient-related claim only energy + 9 core nutrients IIenergy + 7 core nutrients IIIenergy + 5 core nutrients IVenergy + 3 core nutrients V Labelling of prepackaged food with nutrient-related claim and / or any nutrition labels energy + 9 core nutrients VIenergy + 7 core nutrients VIIenergy + 5 core nutrients VIIIenergy + 3 core nutrients Original Proposal

14 Options (Cont’d) OptionCore Nutrients I and Venergy, protein, carbohydrate, total fat, saturated fat, cholesterol, sugars, sodium, dietary fibre, calcium. II and VIenergy, protein, carbohydrate, total fat, saturated fat, sodium, cholesterol, sugars. III and VIIenergy, protein, carbohydrate, total fat, saturated fat, sodium. IV and VIIIenergy, 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 Scheme NutrientNutrient-related Disease EnergyObesity Total fatObesity, Cardiovascular diseases ProteinRenal diseases CarbohydrateObesity, Diabetes SodiumHypertension, Renal diseases, Stomach Cancer Saturated fatCardiovascular diseases, Diabetes, Breast cancer CholesterolCardiovascular diseases SugarsObesity, Diabetes, Colorectal cancer Dietary fibreDiabetes, Cardiovascular diseases, Hypercholesterolemia, Colorectal cancer CalciumOsteoporosis, 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 Proposal Factors 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 I Labelling 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 II All 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 benefits 1 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 Justifications Striking 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 requirements Energy plus 5 core nutrients Regulating only prepackaged foods with nutrient-related claims Speeding up Phase II implementation Phase 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 Steps Draft 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

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