Selling the new wave of sugar-free food and drink

With tighter regulations for food and drink products that are high in fat, sugar and salt (HFSS) now in effect, the landscape for healthier food and drink options is changing. No longer are sugar-free products restricted to health food stores or free-from aisles – now, they’re in high demand across the board.

Brands and retailers are adapting to HFSS

Since HFSS rules were introduced, retailers and manufacturers have responded by changing their approach to health and product reformulation.

“Many brands have chosen to reformulate existing products to abide by new restrictions, while other brands have developed NPD that are compliant with the new rules and healthier,” says Emily Keogh, founder of Palm PR, an agency that has supported several food and drink brands to understand the new rules.

“For example, products with less or no added sugars are more common now than ever before, while the rise of functional foods with added health benefits such as fibre, gut health and immunity support have also continued to enter the market,” Emily says. And she only expects this trend to continue as more brands and consumers become savvier with healthy ingredients.

Indeed, IGD surveyed members of its Industry Nutrition Strategy group in April 2023 and found that 44% of retailers and manufacturers had already responded to HFSS rules with reformulation or new product development. While reformulation is undoubtedly challenging, big brands were achieving reductions in sugar even in traditionally indulgent categories, like cake and pizza, IGD found.

The snacking and confectionery categories have been through “huge changes” recently, Emily agreed. Mars made waves when it announced a lower-sugar, protein Snickers bar, for example.

While some of the key bans on promotions have been delayed until 2025, Jon Walsh, Bio&Me co-founder and CEO, says major supermarkets have still “gone further and acted responsibly,” for example by avoiding multi-buy promotions on HFSS products.

All the retailers surveyed by IGD had made changes to their store layouts, while in-store signage and packaging changes had also been made.

And Emily says brands have also started adjusting their marketing strategies towards health-focused messaging. In fact, they’re even building on the demand for healthier products to bolster conversations with buyers. “The Groovy Food Company, for example, recently launched its best-selling Date Syrup into Waitrose nationwide following increasing demand for natural sweeteners and alternatives to sugar and artificial sweeteners.”

How consumer demand for sugar free is changing

Decisions to reformulate were also driven by a desire to improve public health, hit business targets and meet new consumer demand for healthier food and drink, IGD’s survey found.

Products affected by the HFSS legislation accounted for £18bn of the food and drink market, representing 16% of all sales, according to Kantar. And Sally Ball, head of Kantar Worldpanel’s Nutrition Service, wrote last year that a gradual shift was beginning towards healthier options. For example, in a 12-week period in 2023, Kantar noted a steady movement of £82m away from products within the HFSS categories, with £34.4m of this moving to healthier, non-HFSS alternatives.

“What I’m hearing anecdotally is that these modifications are starting to drive changes in consumer behaviour, which is tremendous news,” Jon agrees, although he adds that he hasn’t yet seen enough specific data to back this up.

The increased availability of non-HFSS products in stores is catching the attention of shoppers who claim to be health-conscious across all age groups, Kantar found. Even amidst the cost-of-living crisis, spending on non-HFSS (ie, healthier) products outpaced that of HFSS products during a 12-week period in 2023, when compared to the previous year.

“Consumers are seeking clearer labelling when shopping for healthier snacking options,” Emily says. More and more consumers are checking the back of packs and ingredients lists when choosing products, and this has aligned with the growing awareness of ultra-processed foods.

Sakshi Chhabra Mittal, founder of health-focused meal plan maker Foodhak, agrees that consumers are more aware than ever of what goes into their food. “Whether it’s social media trends about the back of packaging or customers speaking directly with brands to learn more about the products available. For example, our own Foodhak customers contact us regularly to learn more about our food, and we’re seeing a huge increase in engagement around nutrition.”

“Due to this behaviour,” Emily adds, “brands are not only reformulating products to reduce the number of additives but are also making on-pack health messaging clearer for consumers.”

What’s new in sugar-free snacking?

Kantar’s research revealed that savoury snacks adapted to the HFSS rules quickly, with the healthier savoury snacks market attracting spending that was once directed towards sweet HFSS products. In particular, these products were seen to be appealing to the older demographic. 

But despite NPD and reformulations in the sweet snacking category, Jon says sugar is still a “huge problem” that has persisted for years. 

Convenience remains a priority in snacks, Emily says, and many consumers are seeking on-the-go or easy-to-prepare products with strong health credentials. Bio&Me has developed new flapjack bars that contain 5-6% naturally occurring sugars, which aim to fill the gap for sweet, naturally low-sugar snacks. “Bars are typically laden with added sugars, including popular bars marked as ‘healthier’,” Jon says. 

Sakshi agrees that “a lot of popular protein bars are low-calorie and high in protein but are high in sugar and fat, undermining any health benefits”.

And could ‘healthwashing’ be the next big watchword? Some brands, Jon says, are leaning on marketing rather than reformulations, leading to misinformation for the consumer. “There are some leading brands on the market that project a healthy, wholesome image, but that actually contain over 29% sugar per bar,” he explains. 

“It’s almost as though some brands aren’t being transparent about the fact they contain added sugars. We’ve seen brands using exotic-sounding names on ingredients lists such as ‘coconut sugar’ and ‘brown rice syrup’ to disguise that the products contain added sugars.” According to the science, he says that irrespective of the source, these sugars are still treated like standard sugar in our bodies.

How the drinks market has changed since HFSS

Sugary drinks were an obvious target of HFSS rules, but the change in legislation has occurred alongside an explosion in healthier beverage options.

The rising tide of new start-ups offering healthier and more sophisticated choices for consumers is resulting in a more diverse range of products appearing on retailers’ shelves, says Ashley Verma, founder of Bizzi Drinks.

As a maker of collagen cold brew and matcha drinks, Ashley notes that retailers are “faster to engage in conversation with start-ups, ensuring that the offerings on the shelves are no longer the same old choices. This shift is creating a dynamic and innovative marketplace where healthier options can thrive.”

In particular, the functional drinks sector, a market that IBISWorld says is worth £1.4bn in the UK and rising, is seeing an incredible amount of innovation. From gut-friendly sodas to natural energy drinks and CBD-infused beverages, there’s a huge swathe of interesting, new drinks for independent retailers to choose from that are lower in sugar.

Ashley says Bizzi Drinks’ products aim to appeal to customers by combining convenience, wellness and affordability for “today’s fast-paced world”.

How to sell sugar-free products

Whether driven by HFSS rules, consumer demands or a combination of both, low and no-sugar food and drink is an area that fine food retailers should be catering to in their shops.

As always for speciality retailers, taste is paramount – and Jon says consumers also want products that taste delicious while having no added sugars.

“For fine food retailers,” he says, “the good news is that ‘no added sugar’ products now taste as good as the ‘with sugar’ ones. The old paradigm that healthy products taste ‘rubbish’ has been well and truly smashed.”

Many brands have worked hard to overcome challenges in taste in low and no sugar products by innovating with naturally sweet flavouring agents, like dates and monk fruit.

“Really healthy, natural products taste delicious,” Jon says. “Our conversations with consumers when we’re out-and-about sampling, has shown this time and time again.”

How else can shop owners capture the attention of health-curious consumers? “Firstly, retailers should capitalise on impulse buying by adjusting end of aisle and point of sale positions to focus on healthier items,” Emily says. Foodhak’s Sakshi agrees that stocking convenience products that have added health benefits is a must as consumers look for products they can “easily incorporate in their daily lives”.

And if you have a loyalty scheme, Emily suggests incorporating purchases of healthier items, “such as offering additional loyalty points when a specific healthier product is purchased”.

With so many new brands popping up and shouting about the benefits of little-known ingredients, collaborations can be useful to build consumers’ knowledge. In-store sampling, cooking demonstrations and educational campaigns, as well as engaging on social media with brands, can not only help you form relationships with suppliers, Bizzi Drinks’ Ashley says, but also builds trust with consumers about the ever-growing sugar-free category.