Food & Drink sector update: mandatory labelling changes in a no-deal Brexit

26.11.19

The UK food & drink industry is a major growth sector, generating an annual turnover of £104 billion and an estimated export market exceeding £23 billion. Recent figures quoted by Scotland Food & Drink highlight that approximately two thirds of food produced in Scotland is exported to the EU. Combining that with whisky and other drink exports, the annual value of Scottish food and drink exports to the EU is approximately £2.5 billion.

Clearly, a key driver for sustained growth is ready access to the EU market. While the food and drink sector continues to thrive, the prospect of a no-deal Brexit presents significant challenges. Although now pushed back into the new year (exit currently expected for 31 January 2020), the UK’s anticipated withdrawal from the EU is already having impacts on many businesses. Let’s look at the changes Brexit would require to product labelling and outline some of the proactive measures businesses can take to mitigate the impact of a possible no-deal Brexit.

Food labelling regulation

EU food labelling rules apply to all food placed on the EU market, independently of its place of production. More specifically, EU law governing the provision of consumer information on food products (including labelling compliance) is primarily contained in Regulation 1169/2011/EC on the Provision of Food Information to Consumers (“FIC”).

Updates to DEFRA guidance

On 19 December 2018 the UK Department for Environment and Rural Affairs (‘DEFRA’) published a guidance paper titled ‘Producing and labelling food if there’s no Brexit deal’ (the “Food Labelling Technical Notice”), which inter alia outlined proposals that would enable food business operators (“FBOs”) to continue to allow food showing an EU address to be placed on the UK market for a period of six months after a no-deal Brexit.

However, the Food Labelling Technical Notice was withdrawn on 1 March 2019. The replacement DEFRA guidance was first published on 5 February 2019 and was most recently updated on 23 August 2019. That guidance is titled ‘Food and drink labelling changes if there's a no-deal Brexit’ (theDEFRA Food Labelling Guidance”. The DEFRA Food Labelling Guidance is separated into: (i) goods to be exported from the UK to the EU; and (ii) goods sold in the UK.

One of the significant changes in the updated DEFRA Food Labelling Guidance is a longer 21-month transition period to apply to labelling changes for EU products sold in the UK from exit day (currently 31 January 2020). The intention is to provide FBOs with a practical and reasonable grace period to implement appropriate labelling changes for EU labelled goods that are placed on the UK market. It should be noted that these proposals are not legally binding and remain subject to approval by the UK’s devolved administrations, which have competence over the labelling of food and drink products. It should also be noted that to date the European Commission has not committed to any equivalent transition period.

A high level summary of the anticipated no-deal labelling changes and relevant transition periods applicable to both UK imports and exports are presented in the Appendix to this article.

Market access in a no-deal Brexit

A core regulatory term under the FIC is the concept of an FBO, which is defined as the operator responsible for providing food information and under whose name or business name the food is marketed (or, if that operator is not established in the EU, the importer into the EU market). This is an important principle as it sets out the requirement that UK FBOs will need to have either: (i) a responsible operator based in an EU member state; or (ii) access to an EU-based importer.

At present, a UK business selling pre-packaged foods in the EU can provide the address of the UK business on the label. However, in a no-deal scenario, UK businesses selling products to EU jurisdictions will need to include on each product label a name and EU address of the responsible operator under whose name the food is marketed in the EU (and who would therefore be the FBO for EU purposes). The UK address of an FBO would no longer be valid to ensure continued EU market access.

A UK address together with an EU address on the label would mean that the label is valid for both the UK and EU markets. However, if a UK company does not already have operations established in the EU, it would be required to implement one of the following options in order to maintain EU market access:

  1. set up an EU hub;
  2. engage an existing EU distributor to act as an EU importer; or
  3. appoint a stand-alone EU importer.

Duties of an FBO

An FBO has extensive compliance obligations. These are prescribed under Article 8(2) of FIC and include: ensuring the presence and accuracy of the food information in accordance with the FIC (and the requirements of the relevant jurisdiction); maintaining responsibility for any changes that are made to food information; and verifying compliance with the requirements of food information law and national provisions relevant to their activities.

Engaging an existing EU distribution partner or appointing a standalone importer to take on the role of FBO within the EU may appear to be a logical and practical measure for FBOs with a UK-only presence. However, the EU distributor / importer will acquire responsibility for ensuring that the labels affixed to all products placed on the EU market comply with food information legislation and as such, UK FBOs should anticipate that the distributor / importer would seek extensive contractual warranties and indemnification with respect to labelling compliance. Implementation of an appropriate contractual framework and a clear delineation of roles and responsibilities between the UK FBO and the appointed distributor / importer will be critical.

For further information contact Grant Strachan, Charles Livingstone, or your usual Brodies contact. Also do visit our Brexit Hub for regular updates on Brexit related issues, including our Brexit checklist for businesses.

Useful information

1: FBO address

  Importing - goods to be sold in the UK Exporting to the EU
Requirement FBOs must include the UK address of either a ‘responsible operator’ or an importer on the packaging or label for pre-packaged food sold in the UK. If the FBO does not have a UK address, it would need to appoint a UK based importer and include these contact/ address details on the label. UK FBOs must include the EU address of either a ‘responsible operator’ or an importer on the packaging or label for pre-packaged food sold in the EU. If the UK FBO does not have its own EU address, it would need to appoint an EU-based distributor / importer and include its contact / address details on the label.
Date coming into effect 21 months post-Brexit. At the point of Brexit, so currently 31 January 2020. No specified transition or grace period communicated by the Commission.

 

2: EU health and identification marks

  Importing - goods to be sold in the UK Exporting to the EU
Requirement

FBOs can continue to use the EU oval health and identification mark on products of animal origin (POAO) produced and sold in the UK during the 21 month transition period.

Thereafter, FBOs will need to use the new UK health and identification marks for POAO.

Identification mark would need to change for all POAO that are exported from the UK to the EU.


A UK exporter of POAO from the UK to the EU must replace the EU oval health and identification marks with new UK health and identification marks. Specifically, the GB or full country name UNITED KINGDOM would need to be used on the identification mark.

Date coming into effect 21 months post-Brexit.    At the point of Brexit, so currently 31 January 2020. No specified transition or grace period communicated by the Commission.


3: Country of origin

  Importing - goods to be sold in the UK Exporting to the EU
Requirement

FBOs must continue to label all food with the specific country or countries of origin.

If the product originates from an EU member state then it can continue to be labelled as EU origin. 

UK food must be labelled as ‘UK’ origin after Brexit, and can no longer be labelled as EU origin.

UK food must be labelled as ‘UK’ origin after Brexit, and can no longer be labelled as EU origin.

Date coming into effect At the point of Brexit, so currently 31 January 2020. No specified transition or grace period for continued use of ‘EU’ labelling for UK products.

At the point of Brexit, so currently 31 January 2020. No specified transition or grace period communicated by the Commission. 

From April 2020, the label must also state where the primary ingredient is from (i.e. country of origin or place of provenance).


4: EU organic logo

  Importing - goods to be sold in the UK. Exporting to the EU
Requirement

Food and animal feed registered as organic in the EU will continue to be accepted as organic in the UK and FBOs can continue to use the approved UK organic control body logo until 1 January 2021.

FBOs will be required to use a manual UK organic import system until a new digital system is in place.

Any imports from non-EU countries will require a Certificate of Inspection (CoI).

DEFRA has also published more granular information, including guidance on organic food labelling, titled ‘Trading and labelling organic food after Brexit’. 

This guidance was updated on 25 September 2019 and sets out how the rules for producing, processing, labelling and trading organic food will change in the event of a no-deal Brexit. It also provides that producers may be required to contact export control bodies in countries from which they are importing organic food. 

The EU will decide whether to continue accepting food and feed registered in the UK as organic. UK FBOs must not use the EU organics logo after exit day unless:
i.    the UK control body is authorised by the EU to certify UK goods for export to the EU; or
ii.    the UK and the EU agree to recognise each other’s standards (called equivalency).

In brief, if the UK does not reach an equivalency deal with the EU, UK FBOs will not be able to export food or feed labelled as organic from the UK to the EU.

Date coming into effect FBOs can continue to use the approved UK organic control body logo until 1 January 2021. With effect from 1 January 2021, imports from the EU, EEA and Switzerland will require a CoI.

No agreed transition period. Currently, changes will be applicable from exit date.


5: EU emblem

  Importing - goods to be sold in the UK. Exporting to the EU
Requirement

EU based FBOs will continue to label products destined for the UK market with the EU emblem.
UK FBOs must not use the EU emblem on goods produced in the UK after Brexit unless you have been authorised by the EU to do so.

FBOs must not use the EU emblem on goods produced in the UK unless that FBO has been authorised by the EU to do so.

Date coming into effect N/A – status quo will continue. No agreed transition period. Currently, changes will be applicable from exit date.


6: Geographical Indications (GI)

  Importing - goods to be sold in the UK. Exporting to the EU
Requirement

All existing UK products registered under EU GI schemes will get UK GI status and remain protected in the UK.

The UK will set up its own GI schemes if there is a no-deal Brexit. FBOs will have 3 years from the launch of the UK schemes to adopt the relevant UK logo on food and agricultural product packaging.

The UK Government has said that it will provide further information and guidance on the new UK schemes the coming months. 

It is possible that the EU may not continue to protect UK GI products. In which case, UK companies would need to be prepared to apply to the European Commission to regain:


i.    EU protection; and
ii.    the right to use the EU GI logo.


In this situation, companies would need to show that their product is protected as a GI in the UK. The UK government has stated that it will provide support and guidance for those applications.

Date coming into effect Industry will have 3 years from the launch of the UK schemes to comply with the relevant UK GI logo rules. No agreed transition period. Currently, changes will be applicable from exit date.