Following years of passionate public debate and some recent controversy, the formal implementation of the front-of-pack health star rating (HSR) system has now been agreed by Australian and New Zealand food regulation Ministers.


The decision arose out of the recent Legislative and Governance Forum on Food Regulation (Forum) meeting on 27 June 2014 to discuss the HSR system. While the Forum had previously approved the HSR system in June 2013, it had made no decision on the actual rollout of the HSR system. The subsequent change of Federal Government cast uncertainty on the future of the HSR system, particularly with the Coalition Government’s public commitment to “cutting red tape”, which contrasted with the potential introduction of a new layer of regulation under the HSR system. In addition, concerns had been raised by industry about the extent of cost-benefit analysis undertaken and inconsistencies between the calculator for the HSR system and recommended dietary guidelines.

Yet pressure has been mounting for some time from public health and consumer advocacy groups who claim that a HSR system will provide easy to understand and convenient guidance to empower consumers to make more informed food purchases.

Although the issue of food labelling has become increasingly fractious in recent months, it would have been a very difficult task for the Forum to resile from its previous approval of the HSR system. Therefore, while a decision to proceed with the HSR system rollout, including a timetable for its implementation, has now been agreed, there have been some changes to the original plans.

How the HSR system will work

The HSR system is a voluntary star rating system based on a product’s nutritional value, which has been developed to help consumers understand a product’s nutritional information and food labelling more generally so as to make better informed food choices.

Similar to the star rating used for energy or water efficient refrigerators and washing machines, the food star rating will appear on the front of food packaging for retail sale and give consumers an overall indication of a food’s nutritional quality and information about the key food components within a product. The system rates food products on a 1 to 5 star scale (with ½ star increments) based on four aspects of food associated with increasing risk factors for chronic disease – energy, saturated fat, sodium and total sugar – as well as positive aspects, namely protein, dietary fibre, fruit, vegetables, nuts and legumes and, for some products, calcium. The overall rating of the product is determined based on an algorithm that awards stars according to the quantity of these components within the product. Essentially the more stars, the healthier the food.

Although Standard 1.2.8 of the Australia New Zealand Food Standards Code (Code) already requires most packaged foods to display a Nutritional Information Panel (NIP) which, at a minimum, must feature most of these key food components for average quantity per serve and per 100 grams, the HSR system provides such information in interpretative form on the front of food products.

Some food products also feature the Australian Food and Grocery Council’s Daily Intake Guide (DIG) on front of packs, however this is not an interpretive system as it only presents information about the contribution that a serve of a food or drink makes to an average person’s daily dietary requirement.

The UK and some European countries have adopted traffic light systems for food labelling, which are similar in concept to the HSR system. Interestingly, despite concerns from the food industry that “red” foods would drop in sales and be eliminated by consumers, the British Medical Association, UK Food Standards Agency and others have observed that consumers have in fact interpreted labels sensibly, realising that they can have “red” foods as a treat and have found the interpretative system easier to understand than lists of percentages like the NIP.

The introduction of an interpretative food labelling system was a key recommendation of the 2011 Blewett review of food labelling with a view to simplifying the consumer decision-making process, particularly in relation to choosing healthier food options. Despite the highly regarded Blewett recommendations, the HSR system has taken a significant time to be introduced. It has been in the development stage for over two years, with a working group of government, industry, health and consumer related groups all contributing to the consultation process.

Key outcomes on HSR system implementation

The key decisions from the Forum about the implementation of the HSR system were:

  • the introduction of the HSR system on a voluntary basis over the next five years, commencing on 27 June 2014, with a scheduled review of the implementation progress in June 2016. The timeframe was reportedly determined to enable the system to be introduced cost effectively and to allow reformulation of foods and consultation with SMEs. Interestingly, the threat made by the previous Labor Government regarding introduction of a mandatory system, in the event that there is not consistent and widespread participation in the scheme by industry, has not been reiterated by the Coalition Government;
  • the announcement that New Zealand will join the voluntary HSR system. This follows a major cross-party health inquiry released last November which recommended that NZ immediately adopt the star system on a trial basis and make it mandatory within 3 years if participation is low;
  • the public availability of the HSR Style Guide and calculator on the Australian Health Ministers’ Advisory Council website to ensure that companies who wish to participate in the HSR system can do so without delay;
  • the extension of the HSR Advisory Committee’s role to include considering potential irregularities in relation to the HSR calculator; and
  • the (re)launch of a HSR website, along with the introduction of a social media marketing campaign to support the implementation of the HSR system, and to educate and encourage consumers and the industry to participate in the initiative, which is reportedly close to being finalised.

Cost benefit analysis of the HSR system

In determining its implementation plan, the Forum considered a report by PricewaterhouseCoopers (PwC) which provided a cost benefit analysis of the voluntary implementation of the HSR system, and findings by the Centre for International Economics in relation to the impact of the HSR system on small business.

The report by PwC, titled ‘Health Star Rating System Cost Benefit Analysis’, explores:

  • the potential benefits to the food industry and consumers associated with the voluntary introduction of the HSR system;
  • the cost passed onto the food industry, governments and non-government organisations resulting from the voluntary introduction of the HSR system; and
  • the extent to which the benefits will be realised in order to repay the cost of the system.

In undertaking their report, PwC estimated that the combined government, industry and public health cost of the HSR system would amount to $60 million ($12 million per year), acknowledging the difficulty in predicting the number of businesses and brands that will adopt the voluntary system. PwC also estimated that the annual adult overweight and obesity cost without the introduction of a voluntary HSR system would amount to $106.5 billion by the end of 2019-20. In order to break even in introducing the HSR system, according to PwC, there needs to be an overall reduction in overweight and obese people by 7,565 people (1,513 people per year) compared to current trends.

HSR Style Guide and graphic

The HSR Style Guide was originally created in late 2013, and included a proposed square label design. A number of industry stakeholders subsequently requested greater flexibility in the design of the label so as to accommodate the vertical display of the stars and nutrient icons where packaging size and/or shape is limited. An alternative HSR label design was settled on by stakeholders, which was further amended following consumer testing.

The below image represents the label that food companies may choose to display, with some alternative display options set out in the HSR Style Guide:

Click here to view image.

The Forum also endorsed a process for the HSR Advisory Committee to consider potential irregularities revealed in relation to the HSR calculator, where a star rating may be inconsistent with, for example, the Australian Dietary Guidelines or where cross-category comparisons may mislead consumers.

The Style Guide confirms that the DIG, as well as health logos and certification schemes that provide nutritional guidance to consumers, may co-exist with the HSR system graphic.

HSR = nutrient content claims

The HSR system graphics includes nutrient icons and therefore food manufacturers must ensure that they comply with the requirements for making such claims under Standard 1.2.7 of the Code when using that aspect of the HSR system.

Reactions

Not long after the Forum’s decision, several food and beverage companies announced that they would adopt the HSR system, including Woolworths in relation to its own brand ranges including Homebrand, Select, Macro and Gold, and Sanitarium in relation to its entire product range including Weet-Bix over the next few months.

Food industry body The Australian Food and Grocery Council (AFGC) has cautiously welcomed the Forum’s decision, praising Senator Nash and the Department of Health’s “constructive approach” in working with industry to deliver improvements, including in the design of the scheme, and its introduction and co-existence with the DIG.

Consumer groups such as Choice have argued that with Ministers having finally signed off on the HSR system, the spotlight is now on food manufacturers and have called on them to abandon the DIG and “embrace the HSR to help consumers make informed decisions about what they eat”.

Where to from here?

The voluntary HSR system represents a significant change and cost for food businesses, including those currently using the DIG. They now face three choices – publish the star rating on packaging based on current product formulations, reformulate their products to improve their star rating, or ignore the star rating system.

Food businesses should assess how the HSR system may apply to their food products and the pros and cons of participating in the scheme. Planning early for any decision to adopt the star rating may provide cost savings where it forms part of scheduled or routine packaging updates or packaging changes for compliance with Standard 1.2.7 in relation to Nutrition, Health and Related Claims (which is mandatory from January 2016). Early assessments will also permit time for product reformulation and getting new packaging in market, if desired.