Written submission from Ferrero (PRO0125)

Ferrero’s response to Business and Trade Committee inquiry on priorities for growth

Introduction

A family-owned business founded in Italy, Ferrero is the third largest chocolate confectionery company in the world and has been present in the UK since 1966. Our brands include Nutella, Kinder, Ferrero Rocher, Tic Tac and Thorntons.

We are the third largest investor of Italian origin in the UK, with a turnover of over £500 million employing more than 1,000 people. Recent acquisitions by Ferrero or Ferrero-related companies in the UK include Eat Natural, Fulfil, Fox’s Biscuits and Burton’s Biscuit Company, making Ferrero a major foreign investor.

Overall, the Ferrero ecosystem in the UK has a turnover of more than £1bn employing more than 4,500 people with 10 factories spread across the UK. Our wider supply chain supports more than 10,000 jobs up and down the country, 90% of which are outside of London. We recently committed £16m of investment into our Alfreton factory and are considering additional investment opportunities in the UK.

Business Confidence 

What factors most affect confidence in the UK as a place to invest and expand? 

Confidence in the UK as a place to invest and expand depends on political stability as well as clear, consistent policy direction. Frequent changes in regulation impose a substantial administrative burden, create uncertainty and undermine confidence in the UK as a market for investment.

A joint government and industry partnership is also important to create an environment that supports product innovation and growth. Industry can provide valuable data, learnings and expertise on measures from both a UK and international perspective.

What role do stability, predictability, and long-term planning play in shaping business decisions? 

Stability, predictability and long-term planning are crucial to business decision-making. These factors reduce risk, support confidence in the UK as a place to invest and give businesses greater assurance when making long-term commitments.

Pro-Growth Reforms and Investment

Which areas of reform – planning, infrastructure, regulation, skills – are most urgent for unlocking growth? 

The Ferrero ecosystem has 10 factories in the UK and 90% of our employees are outside of London. These manufacturing sites create employment opportunities, influence social mobility, strengthen community cohesion and drive economic growth. However, we face a variety of challenges:

• Transport – Poor transport links are the number one cause of business disruption (e.g. delays, cancellations and infrequency of services), as it makes it harder to recruit employees who can meet shift times. Our ambitious plans for growth also imply a considerable increase in freight vehicle movements. Ferrero currently has around 14,000 truck movements a year and this number is set to grow. Roads, and particular road access to our factories, need improvement.
• Energy – There is inadequate access to electricity supplies at some of our sites which could hinder our transition from gas to electric ovens or require significant investment from the business in order to support expansion plans.
• Skills – We invest £2m annually in employee development but there are issues with recruiting skilled staff. Those aged 16-25 years old often lack adequate skills or qualifications, for example, those with manufacturing apprenticeships still require substantial ‘in-house’ training. There is also a shortage of engineers and other skills (e.g. machine operators, process operators, quality inspectors and warehouse operators). We are investing in new technologies at our manufacturing sites, increasing automation and digitisation, and require a well-resourced skills system to support our growth plans.

To help address these barriers to growth, the government should:

• Transport – Improve roads as well as both public transport and private car access and parking.
• Energy – Develop targeted support schemes to help manufacturers better connect to electricity supplies and manage energy costs.
• Skills – Grant food and drink manufacturers access to critical funding and skills initiatives outlined in the Advanced Manufacturing sector plan (see further details below).

What role will the Industrial Strategy play in driving growth? 

The Industrial Strategy recognises the importance of government action to create the right conditions for attracting and securing investment. However, despite being the UK’s largest manufacturing sector (bigger than aerospace and automotive combined), the food and drink sector was not included directly in the Industrial Strategy.

This means it is not clear whether food and drink manufacturers can access the critical funding and skills initiatives outlined in the Advanced Manufacturing sector plan which would significantly support our industry in achieving its growth ambitions.

To help unlock our full potential, the government should:

• Ensure that food and drink manufacturers are explicitly eligible and encouraged to competitively bid for Made Smarter Innovation funding through Innovate UK. This would allow more businesses to develop novel digital solutions, increase productivity and resource efficiency.
• Prioritise food and drink manufacturing as a strategic key sector for the new Robotics Adoption Hubs to drive the continued uptake of robotics and autonomous systems.
• Ensure short courses in digital, AI and engineering are eligible for Growth and Skills Levy funding from April 2026.
• Ensure the Technical Excellence Colleges include food and drink content to address shortages in engineering.
• Prioritise food and drink manufacturers for the already announced £100m Engineering Skills Package. This would help to increase the pipeline of engineering skills in our sector.

Costs of Doing Business 

How are tax, employment costs, and regulatory obligations shaping firms’ ability to grow? 

The food and drink sector has seen an increase in cost and bureaucratic burdens as a result of taxation and policy decisions such as the Plastic Packaging Tax, Extended Producer Responsibility (EPR) and higher employer National Insurance Contributions. Policies such as the High in Fat, Salt, or Sugar (HFSS) location restrictions have also negatively impacted sales with some of our better-for-you products.

Please note that Ferrero welcomes packaging EPR, and we are committed to evolving towards more sustainable solutions for all our packaging, increasing the circularity of the materials we use. As a responsible business, we also want to be a partner to government in developing effective policy solutions that lead consumers to make healthier choices. However, we wanted to outline the cumulative burden of government policy – from additional taxes to regulation – which impacts our ability to grow.

There is also a broader failure by successive governments to recognise the current contribution and future potential of the food and drink industry to the UK economy, for example, we were not included as a priority sector in the Industrial Strategy. Our success is integral to national prosperity, high-quality employment and improved living standards.

What policy options could reduce the cumulative burden on business while maintaining fiscal sustainability? 

To reduce the cumulative burden on business while supporting economic stability, the government should:

• Support manufacturers in their continued journey to develop new products to support healthier diets
• Ensure businesses can develop and access a skilled workforce
• Target comprehensive incentives to drive scale-up investment and new technology adoption

Better Regulation 

Is the current regulatory environment helping or hindering growth and investment? 

It is critical that the government creates a regulatory environment that gives manufacturers the confidence to continue investing in developing new products to support healthier diets. This will support the government’s dual missions of driving economic growth as well as raising the healthiest generation.

There are several policy challenges that the Ferrero ecosystem faces in its plans for investment and growth:

Regulation of fruit and nut bars

The Department of Health and Social Care (DHSC) has classified fruit and nut bars with over 50% fruits, nuts and seeds as “sweet biscuits” in regulations restricting HFSS products. For example, they have been banned from being displayed at key locations in-store since October 2022.

• Restrictions on fruit and nut bars may drive negative economic outcomes – The classification, and in turn regulation, has significantly impacted sales of our fruit and nut bars and the entire fruit and nut bar category. This impact may intensify as the effects of the recently introduced restrictions on volume-based price promotions and advertising have not yet been evaluated and could have a corresponding impact on future investment.
• Contradiction in the treatment of bags versus bars – The classifications are contradictory, creating unnecessary challenges for certain types of businesses than others. The classifications exempt similar products (e.g., sweet-coated nuts) made of the same ingredients but sold in bags rather than in bars. DHSC has admitted: “We don’t have a good nutritional/analytical backing for the difference in treatment of these products” (DHSC internal note revealed after FOI enquiry, shared with Ferrero 28 December 2022). The DHSC wants to maintain consistency with the broader categorisation framework established for the regulations. Policy should prioritise achieving better health outcomes, rather than focusing on maintaining procedural consistency.
• Consumption of fruit and nuts is good for public health – We have shared evidence with the DHSC which shows that a change in classification of fruit and nut bars can support better health outcomes including helping consumers to close the gap in meeting their fibre recommendations and ‘5 A Day’ target (National Diet and Nutrition Survey, 2019-2023).

This government should amend the classification in order to support innovation, investment and growth.

New Nutrient Profile Model

The government’s NHS 10-Year Plan announced plans to introduce a new Nutrient Profiling Model (NPM) in the advertising and promotion restrictions. This is not a small, technical change but a significant shift with consequences for consumers, investment and ultimately economic growth.

The NPM is used to classify food and drinks as HFSS and non-HFSS. It was originally created in 2004/5 to improve the balance of television advertising to children. Since 2022, the NPM has been used to define products in scope of HFSS regulations. It has created an incentive for products which are lower in sugar, salt and saturated fat and higher in fibre and protein.

In 2018, there was a public consultation on a revised model, revised in the light of changed dietary advice, but the outcome of this consultation was never published. There has been no modelling published to show how applying the new NPM to the existing HFSS regulations will deliver meaningful change. Instead, the new NPM will undermine years of investment and progress in reformulation, as well as discourage future investment and limit consumer choice:

• Impact on investment – Food companies have made a substantial financial and resource investment into reformulation of products to meet the current NPM. According to the Food and Drink Federation (FDF), food and drink manufacturers invested £180m in 2024 alone in developing new products with less sugar, saturated fat or salt. Modelling from the FDF suggests that only a quarter of these reformulated products would pass the 2018 NPM (based on products included in the FDF ‘Shaping a Healthier Future’ report). Ferrero itself has the ambition to invest more significantly in the ‘better-for-you’ category, which we see as a key part of the future of snacking. We have already invested millions of pounds into developing and introducing some non-HFSS products to the market. All of these new products would fail the 2018 NPM model. The new NPM also makes the case for future investment harder because the thresholds are significantly more stringent, and it is unrealistic in many cases to devise new products that can simultaneously meet its requirements and also consumer needs (including taste and affordability).
• Regulatory uncertainty – Industry needs long-term certainty and clarity to invest, but poor sequencing of regulation and shifting goalposts directly undermines this. The advertising and promotional restrictions only came into effect in October 2025, based on the 2004/05 NPM, and the government plans to introduce mandatory healthy food sales reporting before the end of this Parliament. We understand that the government could use the updated NPM as a measurement for the mandatory reporting. This continual change in regulation imposes a substantial administrative burden, creates uncertainty and undermines confidence in the UK as a market for investment. This will have a cumulative effect of cost implications for consumers.

• Practical implementation and enforcement challenges – There are also challenges around the practicalities of a free sugars criterion in the new model. Free sugars cannot be analysed for and will not appear within an ingredients declaration or recipe. This means that estimating free sugars is technically challenging and often requires detailed information from raw material specifications. This makes the calculation labour-intensive, commercially sensitive and can never be definitive.

The government should reconsider plans to introduce a new NPM and focus on bringing forward mandatory reporting and evaluating HFSS policies currently implemented. The current NPM is supporting product reformulation and investment in innovation.

Mandatory healthy food sales reporting and targets

The DHSC has announced plans to introduce mandatory healthy food sales reporting, which is intended to lead to mandatory healthy food sales targets. We welcome plans to introduce mandatory reporting and are engaging with the DHSC on the policy design, including the metrics used to define “healthy foods”. However, we want to underline the potential operational and administrative challenges which need to be carefully considered to avoid placing undue burden on business:

• Administrative burden – Calories per portion size should be one of the metrics used for sweet-packaged food categories. It would reduce the administrative burden of reporting requirements, compared to a 100g based metric, because we already globally report on kilocalories (kcal) per serving. Public Health England’s sugar and calorie reduction programme also highlighted that portion size is the more meaningful mechanism (rather than reformulation) for the chocolate category to help consumers limit their intake. A portion size metric also supports consumer understanding as it reflects how products are actually eaten rather than relying on a 100g standard measure.
• Operational challenges – We will need to set up a new IT system to capture specific data required by the new reporting rules. It currently costs Ferrero tens of thousands to compile our packaging reporting under the EPR requirements. We expect the costs for healthy food sales reporting to be significantly higher. We will also need to dedicate resource to manage data collection, reporting and compliance. Ensuring accuracy and traceability is time intensive. This may involve costs for additional personnel and staff training on the new processes.
• Geographic scope – The reporting should also be UK-wide as it would be extremely challenging and costly to capture regional data. We are already required to report nation data for packaging, and it is very difficult and not reliable given we don’t have that level of detail of where our products are sold.
• Economic and commercial implications – For the targets, it has been indicated that they will initially apply to retailers, and they will be able to use tools at their disposal to help them meet their targets, including levers such as reformulation, store layout and changes to customer incentive and loyalty schemes. The effect would be that retailers transmit the pressure back up the supply chain on to manufacturers. However, retailers and manufacturers already have important, commercial relationships, and adding a regulatory implication could be very destabilising. The economic and commercial implications of this policy have not been explored, and we believe that it is necessary to do so. 

The government should ensure calories per portion size is one of the metrics used for sweet-packaged food categories and conduct a thorough analysis of the commercial implications before introducing the mandatory healthy food sales targets.

Government Strategy and Coordination 

How coherent and effective are current government structures for coordinating pro-growth policy? 

There needs to be closer collaboration with industry and join-up between different government departments.

We believe working in partnership is key to developing effective policy solutions. This involves regular dialogue and an appreciation of what it means in practice to configure and implement policy in a commercial marketplace. Industry can provide valuable data, learnings and expertise on measures from both a UK and international perspective.

The Government’s missions – particularly its priority for economic growth – are cross-cutting issues. This means departments need to collaborate on policy development to ensure measures do not inadvertently undermine these missions.

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