EU DG Sante changes in policymaking strategy? The alcoholic beverages report case

The DG Sante of the EU Commission on 13th March 2017 published a report – due by 13th December 2014 – responding to the obligation set by Article 16(4) of Regulation (EU) No 1169/20111 on the provision of food information to consumers.

This provision exempted alcoholic beverages containing more than 1,2 % by volume of alcohol from the mandatory list of ingredients and the nutrition declaration and stated that the Commission shall produce a report addressing whether alcoholic beverages should be covered, in particular, by the requirement to provide the information on the energy value, and the reasons justifying possible exemptions, taking into account the need to ensure coherence with other relevant Union policies and considering in this context the need to propose a definition of ‘alcopops’.

Here below the Commission’s conclusions of the report and a brief comment about the solution proposed by the DG Sante:

“Under the current rules, unlike for other foods, the indication of the list of ingredients and the nutrition declaration is not obligatory for alcoholic beverages. With the nutrition declaration having become mandatory for the vast majority of pre-packed food as of 13 December 2016, the particular situation of alcoholic beverages is now even more salient.

European consumers have therefore reduced access to the nutrition declaration and to the list of ingredients with the exception of ingredients which may have an allergenic effect. The European Parliament, but also the World Health Organisation, consumer and public health organisations are now asking for new labelling rules for alcoholic beverages, especially concerning the labelling of the energy value.

Member States’ experts indicated some expectations, especially regarding the nutrition declaration, and more particularly for the mandatory labelling of the energy value.

In the past, the economic sectors concerned have voiced their opposition to a mandatory labelling regime. Today, the sector acknowledges the right of consumers to know what they are drinking. On that basis, an increasing number of voluntary initiatives have emerged providing consumers with information on the ingredients, the energy value or the full nutrition declaration of alcoholic beverages and addressing consumers’ expectations for more information on the drinks they consume. Originally, such voluntary information was mainly accessible through new information and communication technologies. However, according to information from the sector, it should now increasingly be found on the labels themselves.

In view of the lack of legal action in this area, some Member States have adopted national rules requesting partial indication of ingredients for certain alcoholic drinks. Even if the provisions for the nutrition declaration are fully harmonised, some Member States are also notifying national measures addressing the nutrition declaration for alcoholic beverages. Such national initiatives contribute to an increased risk of market fragmentation.

The list of ingredients and the nutrition declaration are key information particulars that help consumers to make more informed and healthier choices. The exemptions from the list of ingredients and from the nutrition declaration for certain foods cover, mainly, single ingredient products, whose name suffice to inform the consumers about their content, like salt, fruits and vegetables. However, in the case of alcoholic beverages, it cannot be assumed that consumers are necessarily aware of the generally various ingredients used in the production process and of their nutritional value.

On the basis of the information reviewed, the Commission has not identified objective grounds that would justify the absence of information on ingredients and nutrition information on alcoholic beverages or a differentiated treatment for some alcoholic beverages, such as ‘alcopops’. At this stage, the Commission therefore sees no need or clear added value for a specific definition of ‘alcopops’ for labelling purposes.

This report shows that the sector is increasingly prepared to provide responses to consumers’ expectations to know what they are drinking. This is demonstrated by the expansion of concerted or independent voluntary initiatives developed and implemented by the sector to provide consumers with information on the list of ingredients, the energy value and/or the full nutrition declaration on or off label. It has to be particularly noted that a rising number of alcoholic beverages present on the EU market already bear the full nutrition declaration. Taking into account these recent developments, the Commission considers that as a first step, current voluntary initiatives should be allowed to develop further so as to provide list of ingredients and nutrition declaration. It therefore invites the industry to respond to consumers’ expectations and present within a year of adoption of this report a self-regulatory proposal that would cover the entire sector of alcoholic beverages.

The Commission will assess the industry’s proposal. Should the Commission consider the self-regulatory approach proposed by the industry as unsatisfactory, it would then launch an impact assessment to review further available options: in line with Better Regulation principles this impact assessment would consider regulatory as well as non-regulatory options, in particular, regarding, the provision of information on the energy value of alcoholic beverages; such assessment should carefully consider the impact of options on the internal market, on the economic sectors concerned, on consumers’ needs and the actual use of this information, as well as on international trade.”

Commission’s recent conclusions are quite peculiar, at least in the food sector panorama. Since today, DG Sante never delegated similar tasks to industry: it has to be held in account that from one side the information discussed constitute – fundamentally – labeling obligation, but on the other side the choice to intervene or not could greatly impact on sensitive public health issues and on Member States expenses for prevention of NCDs and alcohol related diseases.

Politically speaking, this could be read as a signal of political weakness of the Commission? Maybe, but on my view it is more probably a way to “put the hot potato” in the hands of the industry, that in case of inaction will be most probably the target of the blame of the public opinion next year.

The efforts made by the industry in the recent years, in terms of consumer information and promotion of responsible consumption of alcohol, are undubitable: but now the sector has to show its full maturity and present a balanced proposal. Otherwise, it could face some difficult times on the road ahead.

DG Agri study on the ‘State of play of agricultural interbranch organisations (IBOs) in the EU’

DG Agriculture and Rural Development of the European Commission has just released a study on the ‘State of play of agricultural interbranch organisations (IBOs) in the EU’ in the context of the current Common Market Organisation under Regulation (EU) No 1308/2013.

Arcadia International together with Wageningen University and a network of national food lawyers (including me and my dear friend Francesco Montanari) performed this study for the Commission. The study provides a detailed overview of national legislation on IBOs as well as an analysis of the sectors in which IBOs have been established so far and their activities. This would not have been possible without the cooperation of all stakeholders surveyed and interviewed during the study to whom we are very grateful!

The full report and annexes can be downloaded HERE.

Some findings extracted from the executive summary:

Member States with legislation on IBOs – main features: As regards the definition of ‘IBOs’, several Member States have laid down national definitions for this purpose. Although national definitions largely coincide with the notion of IBOs provided by Regulation (EU) No 1308/2013, the legislation of each Member State has its own peculiarities.

The national legislation of most Member States provides for the possibility for IBOs to conclude agreements, decisions and concerted practices, provided that they do not breach the provisions of Regulation (EU) No 1308/2013.

Article 164 par. 1 of Regulation (EU) No 1308/2013 allows Member States to extend agreements concluded within an IBO to other operators that are not members of that organisation and that act within its economic area(s), as long as the IBO is considered to be representative of the production, the processing or the trade of a given product. Furthermore, in accordance with Article 165, when an IBO agreement has been extended, Member States may also decide that non-members, which benefit from that activity, are subject to the payment of all or part of the fees intended to cover the costs directly occasioned by the activities undertaken by the IBO in the general economic interest of the sector.

Member States with national legislation on IBOs but with no IBO recognised: Currently, IBOs are formally recognised only in France, Greece, Hungary, Italy, the Netherlands, Portugal, Romania and Spain. The reasons for the lack of recognitions in the remaining 11 Member States vary and include, for instance, the lack of awareness about IBOs, the preference for other organisational structures, the lack of funding opportunities, distrust towards vertical cooperation in the food supply chain, due to historical reasons, as well as the administrative burden associated with their establishment. Likewise, in certain Member States, the slow uptake and the relative weakness of producer organisations recognised under Regulation (EU) No 1308/2013 at national level is regarded as a factor that justifies the current lack of recognised IBOs.

Member States with no legislation on IBOs in place: 9 Member States, namely Denmark, Estonia, Finland, Ireland, Luxembourg, Lithuania, Sweden, Slovenia and the United Kingdom have currently no national legislation for IBOs. The reasons are similar to the above mentioned.

The number of IBOs in the European Union has increased from 56 IBOs in 1990 to 123 (119+4) in 2016. The recognition of additional ones is planned during the second semester of 2016 (fruits and vegetables and floriculture in the Netherlands, fruits and vegetables in Spain, banana in France, and 2-3 additional ones in Greece). In the 1980- 1995 period growth was mainly observed in France. Since then the growth occurred in 7 other Member States (Greece, Hungary, Italy, the Netherlands, Romania, Portugal, and Spain). More than half of the recognised IBOs are located in France (63) for 60 located in the other 7 Member States (7 in Greece, 6 in Hungary, 3 in Italy, 27 in Spain, 7 in the Netherlands, 5 in Romania, and 5 in Portugal). Most of the IBOs have a national scope (85 out of 123). Regional IBOs are present in only 2 MS (France with 36 regional IBOs in mainly the wine sector, and Spain with 2 regionally recognised IBOs in Andalusia). There are, at the moment, no transnational IBOs at EU level.

Representativeness rarely reaches 100%. It usually ranges between 80 and 95% at primary production level. In general, the level of representativeness seems to be higher in primary production than for the other stages of the supply chain.

The study shows that the main three objectives of IBOs are:

 First, improving knowledge and transparency of production and the market;

 Secondly, promoting consumption on internal and export markets; and

 Thirdly providing information and perform the necessary research to innovate and secure quality of the products.

IBOs are confronted with several challenges: The first main challenge is linked to the concerted management of interests of the different actors in the supply chain. The organisation of dialogue has to be preceded by a pre-condition, which is the clarification of the interests of the different categories of supply chain actors involved and the construction of a common position. In addition, analysis of the history of IBOs shows that the success of dialogue between supply chain actors within the IBOs is partly determined by the role that public authorities play. Another challenge is related to the demand of more transparency in the IBOs governance and procedures.

Benefits of IBOs

The assessment of success and consequently the benefits arising from IBOs have to be considered carefully as the realisation of benefits is not shown in all cases due to the variability of organisations and governing principles. Complexity is added by the very nature of mostly intangible or soft benefits that can neither be measured nor quantified explicitly.

IBOs offer a platform for discussion between supply chain actors that are members of these organisations and create the conditions for collective communication with other actors of the same supply chain but also leads to improve communication between IBOs members.

Additionally, this platform creates a focal point for policy dialogue with government and public authorities. Public authorities also benefit from the presence of IBOs in the supply chain in emergency and crisis situations. IBOs have therefore a specific role for the supply chain as an entry point for Competent Authorities. When an IBO represents all the stages of the chain it covers (because extension is systematically applied), authorities can use it as an entry point for implementing dedicated measures, proposing the delegation of tasks, and therefore the transfer of costs to the private sector.

In some cases, the possibility to extend food safety or plant health mandatory measures to all actors of a given agri-food sector provides a robust and immediate response to food safety emergencies and crisis.

Supply chains benefit from IBOs activities as regards the collection and dissemination of technical and economic knowledge. IBOs are centres of expertise which collect technical and economic data, discuss the findings and then make available this knowledge to their members (and often also to non-members). The presence of an IBO in the supply chain allows for a fairer distribution of risks and profitability.

IBO: tools for the development of supply chain?

IBOs may play a key role in the functioning of the supply chain, and therefore in developing the food supply chain for the benefit of all actors. However, the vertical cooperation model cannot ensure such developments by itself alone. It is in fact only one amongst the tools that could be implemented in the supply chain. In several MS in which no IBOs are recognised, other types of vertical cooperation exist, according to the description of the current landscape. There is quite a diversity of situations, which might be seen as a sign of adaptation to national situations.

To obtain the benefits of interbranch organisations, components of the legislation (especially possibility of extension of rules and financing) and the conditions of success presented above must be implemented, even if these prerequisites do not provide guarantees of effectiveness. Effective participation of members and real commitment to collaborating must be present. Moderation by public authorities in stakeholders’ discussions and disputes could also be seen as a factor of sustainability.

Even if the number of IBOs continues to grow at a regular pace, the full implementation of the “IBO concept” – i.e. the full use of legislative provisions, including extensions of rules and financing to non-members, and the establishment and establishment of close relationship between all actors being economic actors, other stakeholders and public authorities – is still under development. A majority of Spanish and Romanian IBOs have benefitted from national funding via subsidies at recognition. However, they currently suffer from lack of funding as subsidies have been stopped and no extension of rules is in place to date.