Impacts of a minimum pricing policy on high fat, sugar and sodium (HFSS) foods: Environmental, dietary and welfare analysis

Foods high in fat, sugar and salt (HFSS) are detrimental to people’s health, social well-being and the environment. Minimum unit pricing has shown potential to reduce cigarette and alcohol consumption, but it is unpopular in the food and drinks sectors. This research aims to simulate the shadow price or minimum price for HFSS that could potentially reduce demand by 10 %, and estimate the impacts on nutrition, climate and economic welfare in Scotland. The Linear Approximate Exact Affine Stone Index (LA/EASI) demand model was applied to household consumption data from Kantar Worldpanel (KWP) to derive elasticities that were used to simulate the minimum prices for the HFSS categories considered. Greenhouse gas emission estimates were derived from the SHARP Indicators Database (SHARP-ID) to estimate CO₂-eq changes, and the log of living cost index was used to estimate the economic welfare effect of the policy. The expected minimum increment in prices with respect to the baseline price was approximately 28 % for edible ices and ice cream, 9 % for sugary drinks and 10–17 % for total puddings and desserts; biscuits and savouries; and confectionery, cakes, pastries and sugar morning goods. This had implications for non-targeted foods. For instance, the purchase of fruit and vegetables decreased by 0.47 % and 0.82 % respectively, whilst sugar and preserve purchases increased by 1.30 %, marginally discounting the benefits of the policy. On the positive side, purchases of meat, fish and alcohol decreased, and dairy product purchases increased. For the average per capita dietary carbon footprint, the policy reduced net average total CO₂-eq emissions by 0.7 %. However, consumers would require a 12.3 % increase in expenditure to consume the same basket of food as before the price change. In summary, although the policy is expected to improve climate health, there will be negative unintended effects on non-targeted foods, as well as economic welfare loss if consumers decide not to change their consumption habits. It is recommended that policymakers consider the net total effect of the minimum pricing before introducing it in the food and drinks sector.