Greggs CEO Roger Whiteside warned that any government regulation aiming to reduce the fat, sugar and salt content of foods that is only targeted at the larger food companies risked creating an uneven playing field that independent retailers could exploit.
Greggs accounted for less than 2% of the UK’s £55bn out-of-home (OOH) food sector, Whiteside told the Westminster Food and Nutrition forum on tacking childhood obesity, held in London last week (9 May).
“The temptation with regulation is to hit the big guys,” he said. “But we are less than 2% of the market. If we regulate and it’s the big guys only, we just squeeze the balloon at the other end.
“Over half the [OOH] market is independents. We’ve got to deal with that end of the market, otherwise it’s not a level-playing field.”
Low calorie-sandwiches and drinks, fruit pots and yogurts made up £100m of Greggs sales, he explained. But the independent sector was “going completely the opposite way”, he warned.
“As they see us trying to be healthier, they see the market opportunity being less healthy. Because they know that bigger cakes and more indulgent things sell better. Part of my worry in taking the direction we have taken is that we expose our underbelly to the independent sector who then fill that gap, knowing that customers will likely respond. So that’s a problem.”
Balancing business and 'doing the right thing'
Finding a balance between commercial interests and doing the right thing is something Greggs wrestles with all the time, said Whiteside. Public Health England wants to see a 20% calorie reduction across the industry (including the OOH sector) by 2024. Whiteside used the seminar to detail Greggs’ efforts at reducing the fat, sugar and salt reduction in its products. Social responsibility, he said, was “deeply embedded in the business”.
“I’ve been in food retail for 40 years and I’ve never known the level of conversation around healthy food. That’s a good thing,” he said.
“We know there’s a problem and we know that we’re in the firing line because we’re a baker who makes indulgent food that shouldn’t be over-consumed. So we know we need to engage in that problem and do our part to help solve it.”
He said that sugar reduction was not proving as “difficult as first thought” and he remained confident Greggs would meet the 20% reduction target set for 2020 by PHE. But fat reduction, particularly in savoury pastry products was proving more difficult, he admitted.
“We made a go of trying to get savoury products with less fat. We hung onto it and over promoted it for three to four years. But in the end there just wasn’t the demand for it. So we decided enough was enough.”
He also conceded that people “don’t expect to find healthy stuff in Greggs. So how do you make the association of having the two together is really difficult.”
"If we can find healthy food that people actually like, we’ll make lots of money… that’s the holy grail."
Who shrank all the pies?
One solution was to create smaller sizes, despite the fact “big cakes sell better than smaller cakes”. Greggs used to have 10 variations of everything it sold. But when it restructured its supply chain in 2017 it standardised products into one smaller size.
“We used to have 10 variations of everything we sold. Now, if I was purely a hard-nosed capitalist, I would have picked the biggest product each time and standardised that all around the country because that’s the one that’s sold best. I haven’t done that. We’ve tried to pick the smallest one and suffer the commercial consequences because we know that we shouldn’t be encouraging people to eat large cakes: we should be encouraging people to eat smaller cakes.”
Greggs was also revamping its labelling and over promoting healthy choices, he explained. “We’ve given it prominent footage; we’ve given it more footage than it deserves; we’ve taken millions of pounds of waste trying to make sure it is available. And even in those circumstances most of those products have not shown enough level of demand to be sustainable.”
Industry innovation is lacking
Whiteside said he was not struck by innovation across the industry as a whole. “There’s lots of revolving innovation as companies try and find those products that are both healthy and tasty – but very few things have stuck. It’s a shame,” he joked, “as if I could see something I could save time and just copy it!”
He continued: “Coffee shops don’t seem to show too much innovation in that space. They are more coffee led than food led. Some of the fast food operators I would say have made much more effort to try and find things that are healthier for you. But they struggle with the same thing we do: put alongside is the more indulgent product that people get tempted to more often.”
He added: “We’re trying to find solutions by trying to be commercially successful by providing those choices. Because we’re so accessible – particularly in less deprived areas – we think we’re in a better position than others to do that.”