Food (Promotion and Placement) (Scotland) Regulations 2025: business and regulatory impact assessment

5. Regulatory and EU Alignment Impacts

5.1 Intra-UK Trade

The UK grocery and food retail market is highly integrated and dominated by a small number of large supermarket chains alongside discounters like Aldi and Lidl. These retailers operate extensive distribution networks across the UK, supported by centralised systems that allow for economies of scale and buying power. This integrated structure means that supply chains, logistics, and promotional strategies are largely UK-wide, with minimal friction for goods moving between nations.^[39]

Scotland represents 10.8% of the UK’s food and drink manufacturing turnover,^[40] and exported an estimated £3.36 billion of manufactured food products, beverages and tobacco products to the rest of the UK in 2021.^[41] The manufacturing supply chain is also highly integrated. The Food and Drink Federation provide the example of the Nestlé factory at Girvan, South Ayrshire, which uses around 5-7% of Scottish milk supply to produce chocolate milk crumb, a key ingredient for chocolate confectionery products which is used at other Nestlé factories across the UK.^[42]

The regulations align with equivalent restrictions that will be in place in England and Wales. This minimises regulatory differences across the UK and are therefore unlikely to have a significant impact on intra-UK trade.

Although Northern Ireland do not currently have equivalent regulations in place, the regulations are not considered to introduce any significant barriers to trade from products originating from NI. While there are no official statistics available on trade of in-scope products between Scotland and Northern Ireland, there is no evidence to suggest relevant goods from NI represent more than relatively small part of the overall Scottish and UK market.

Consideration was given to the potential for any restrictions on promotions on packaging to act as a barrier to trade within the UK market. To reduce any impact on trade the final restrictions do not completely restrict the sale of products with restricted promotions on the packaging – they will still be capable of being sold as long as the products are not sold on that promotion. Guidance will support retailers with the process of ensuring such promotions are effectively disapplied, for instance through over-stickering.

The 2024 public consultation sought views on potential impacts on the ability of business to trade within the UK market. Some consultation responses indicated concerns should the restrictions in Scotland diverge from the restrictions in place in the rest of the UK. The final proposals ensure alignment across most of the UK and minimises regulatory divergence.

Consideration has been given to the interaction with the Internal Markets Act 2020 (“UKIMA”). The Scottish Government does not expect UKIMA to impact the operation of the Regulations. The Regulations are not relevant requirements which would engage the mutual recognition principle, but are considered to fall within the scope of the principle of non-discrimination. The restrictions do not directly discriminate, as they treat incoming goods and local goods in the same way. The restrictions are also not considered to indirectly discriminate. Indirect discrimination would occur if an “adverse market effect” arises and the restrictions cannot reasonably be considered a necessary means of achieving a legitimate aim. It is not expected that the restrictions will give rise to any adverse market effect under UKIMA - there is no evidence to suggest that goods from Scotland would be put at any less of a disadvantage in comparison to goods with a relevant connection to another part of the UK, nor that there could be any significant adverse effect on competition for goods in the UK. This is particularly so given the level of alignment across the UK. In addition, the restrictions are considered a necessary means of achieving a legitimate aim (protection of health).

5.2 International Trade

There is currently no evidence to suggest that restrictions on location and volume price promotions of HFSS products in Scotland would have significant impacts on international trade. Scotland accounts for less than 10% of the UK retail food market, and UK Government impact assessments for similar measures, such as HFSS advertising restrictions^[43] and limits on volume price promotions^[44], found no clear evidence of any effect on net trade.

Official trade data for food and drink is relatively limited for Scotland. HMRC Regional Trade Statistics^[45] report that for the Standard International Trade Classification grouping of “Food and live animals” Scotland imported £1.93 billion and exported £2.15 billion in 2024. Further disaggregation is not published by HMRC.

Estimates from the Scottish Environment, Food and Agriculture Research Institutions (SEFARI) have produced estimates of food security which include estimated imports on a high-level commodity basis^[46] (e.g., beef, cereals), a methodology that precludes the assessment of trade flows for specific processed food and drink products, including HFSS.

Considering the UK as a whole. In 2023, 58% of food consumed in the UK was domestically sourced, with 42% imported, including 24% from the EU.^[47] The total value of UK imports for the food, feed, and drink sector was £61.1 billion,^[48] of which sugar and sugar preparations represented only 3.25%.^[49] A desk-based review of supermarket product information indicates that 9 of the 10 most popular sweets and confectionery products^[50] consumed in the UK are manufactured domestically.

The restrictions apply equally to domestic and imported goods, meaning there is no relative disadvantage for overseas producers. Any reduction in HFSS product sales could be offset by increased demand for non-HFSS alternatives, which may include imported goods. While many HFSS products are manufactured in the UK, some rely on imported ingredients, so any trade effects could extend beyond finished goods.

Scottish exporters are unlikely to be affected, as the measures relate solely to promotional activity within Scotland, although there may be an incentive to increase exports if domestic demand falls.

It is also important to note that the policy is intended to influence only a narrow set of promotional practices for a subset of HFSS products, which themselves represent only part of the overall food and drink market.

As outlined under intra-UK trade, to reduce any impact on trade the final restrictions do not restrict the sale of products with restricted promotions on the packaging – they will still be capable of being sold as long as the products are not sold on that promotion. Guidance will support retailers with the process of ensuring such promotions are effectively disapplied, for instance through over-stickering.

The measures, particularly in light of the approach taken to packaging, are not considered a Technical Barrier to Trade and WTO notification is not required.

5.3 EU Alignment

This policy measure is not likely to impact on the Scottish Government’s policy to maintain alignment with the EU.