Accelerating complexity:Regulatory trends in theconsumer goods industry

Consumer Products and Retail businesses face a numberof trends that will transform the markets in which theyoperate over the next few years. Each of these trends isin itself significant; the fact that they are increasinglyinterrelated and the magnitude of the potentialcombined impact makes the challenges for executiveseven more complex. They include:

• Dramatic growth in emerging markets; slowinggrowth in developed ones.

• Consumers who are more mobile, empowered bytechnology and connected in real-time.

• Focus on cost cutting, liquidity, international growth,and diversification.

• Sharper focus on the responsible sourcing ofmaterials, commodity cost volatility, and sustainability.

• Continuing consolidation across sectors andgeographies.

• A changing regulatory environment in whichgovernments are examining increasingly aggressiveapproaches to the regulation of different categoriesof consumer goods.

This paper focuses on the last of these trends. Over thepast forty years, there has been an identifiable cascadein the regulatory and tax burden from more harmfulproducts, such as tobacco, to less harmful productcategories such as food, with accelerating timescales.For consumer products companies, this will require astep change in level of regulatory awareness andengagement.

This report is part of a DTTL program to help executivesin the consumer industries address this and other criticalglobal challenges. The program focuses the deepknowledge and experience of practitioners in Deloittemember firms around the world on specific priorityissues and solutions to help executives guide theircompanies. The intention in each case is to provideexecutives with industry-specific perspective and providepractical guidance that has commercial impact.

I hope you find this study useful and that you will alsobenefit from our upcoming reports on sustainability,pricing, globalization, and other topics as they becomeavailable.

I welcome your ideas and input on this and other topicsthat you feel are important for your business, andencourage you to contact me or the leaders listed onthe back of this report.

Leon PietersConsumer Business Propositions LeaderDeloitte Consulting, Netherlands

Introduction

Accelerating complexity: Regulatory trends in the consumer goods industry 1

Growing concerns about public health, societal issuesand environmental sustainability are encouraginggovernments to examine increasingly aggressiveapproaches to the regulation of different categories ofconsumer goods, as well as introducing – and raisingexisting – product taxes. Furthermore, unprecedentedfiscal deficits are forcing many governments to exploreand implement new revenue generating measures –providing further incentive to increase product taxes,legitimized in part by the wider strategic agenda.

This impact can most directly be seen in relation to thetraditional “sin” products such as alcohol and tobacco.For example:

• Australia is currently in the process of legislating toremove all branding from tobacco packs, and othercountries are expected to follow shortly.

• Iceland is currently considering proposals to make thesale of tobacco illegal except under prescription.

• The Russian Duma recently voted to introducerestrictions on the late night sale of alcohol and toban its consumption in a variety of public places.

• Thailand has plans to implement graphic healthwarnings on alcoholic beverages.

However, the effects are also being felt in sectors thathave not yet been subjected to regulation of this sort,particularly in food and non-alcoholic beverage. In 2010,for example, the Danish government raised taxes by25% on ‘unhealthy’ food and drinks, and in September2011 the Hungarian government introduced a specialtax on foods high in fat, salt, and sugar content.

Regulatory trends in the consumergoods industry – the new imperative

Taxing less healthy foods and drinks is also beingactively discussed in many other countries, including theUK. Proposals are currently under consideration in theU.S. that could add 30% to the cost of an average softdrink. Consumer goods companies are also increasinglyconcerned about a range of environmental taxes thatwill make products more expensive.

Deloitte’s* experience from working with many leadingconsumer products companies around the world,reinforced by specific research undertaken, indicatesthat these changes reflect an accelerating cascade ofregulation across different sectors and geographies.

These changes create material value at risk forconsumer product companies in terms of the cost ofmanaging the burden of regulation; the loss of brandequity where the ability to market brands is restricted;and reduced sales volume as products become lessavailable and affordable

As some major players in the industry have alreadyrecognized, this requires a step change in level ofregulatory awareness and engagement. This can bechallenging for food and beverage businesses –especially large, multinational organizations which areexposed to a complex array of different regulatoryissues across a wide spectrum of geographies andproduct categories.

However, businesses that are thoroughly prepared witha strategic response to these challenges are likely to bebest positioned to mitigate the risks they are exposed toand able to capitalize on the opportunities they present.

In 2010 ... the Danish government raised taxes by 25%on ‘unhealthy’ food and drinks, and in September 2011the Hungarian government introduced a special tax onfoods high in fat, salt and sugar content.

* As used in thiscommunication, “Deloitte”means Deloitte ToucheTohmatsu Limited memberfirms.

2

The changing regulatory landscape will prompt manybusinesses to consider the potential market impact ofincreasing product regulation, what it will mean fortheir own business, and what their strategic responseshould be. However, before discussing how businessesshould respond, we should understand what has driventhis unprecedented – and growing – intensity ofregulatory intervention. While there are number offactors that influence these regulatory changes, itappears that the key factors are the increasing fiscalpressure on governments; growing willingness tointervene to promote public health and mitigateadverse societal impacts; and a desire to minimize thenegative impact of industry on the environment.

Fiscal deficits: A significant driver of product taxationon consumer goods companies will be the need forgovernments to balance fiscal budgets. Many majoreconomies are facing mounting public debt andgovernments are seeking ways to get budgets backinto balance by increasing revenues and decreasingspending (see Figure 1).

Public health: The cost to society of smoking(estimated to be £5bn in UK in 20091) has historicallyprovided a strong argument for government taxation.A similar argument is put forward for alcohol products.In part as a result of this, tobacco and alcohol taxesconstitute a significant source of fiscal income,accounting for 0.66%2 and 0.23%3 of total taxrevenues in the U.S., respectively. In the UK, tobaccoand alcohol taxes represent an even higher percentageof total government tax take, at 2.2%4 and 2.3%5,respectively. The cost of obesity in the U.S. is likely torise to about $344 billion in medical-related expensesby 2018, eating up about 21% of health-carespending.6 In the UK, NHS spending on obesity wasfound to have increased seven-fold between 2006 and20097. However, the fiscal contribution of the food andbeverage sectors does not yet compare with that oftobacco or alcohol. The problem is not limited todeveloped economies, with the World HealthOrganization (WHO) estimating in 2008 that 1.5 billionadults, 20 and older, were overweight.8

Environment: The negative impact of the manufacturing,distribution, consumption and disposal of consumerproducts on the environment is considered a major costto society but has not yet been systematically targetedby governments. The Stern review in 2005 estimated thatthe total cost of climate change will be equivalent tolosing 5-10% of Global Gross Domestic Product everyyear, given a 5-6 degree increase in average globaltemperatures.9 Agricultural processes in food production,clothing manufacture and the raw materials used inconsumer technology, among others, have beenhighlighted as significant contributors to climate change.However environmental taxes accounted for just 8%10

of total taxes in the UK in 2010, and the level ofenvironmental taxation is generally lower in lessdeveloped countries. Governments are increasingly likelyto take the view that there is scope for furtherenvironmental regulation and taxation to make up forthe discrepancy with the cost of environmental damageto GDP.

Key drivers of increasing regulation

Figure 1. Current and target budget balance in OECD, BRIC and South Africa

2010 2015

Source: Economist Intelligence Unit, 2011

% GDP

UK

South Africa

Russia

Portugal

Netherlands

Mexico

Japan

Italy

Israel

Ireland

India

Hungary

Greece

Germ

any

France

China

Canada

Brazil

Belgium

Austria

USA

-35

-30

-25

-20

-15

-10

-5

0

5

1 Tobacco Control Journal/British Heart Foundation, 20092 Tax Policy Centre, 20103 Tax Policy Centre, 20104 HMRC, 20115 HMRC, 20116 Joint report by the United Health Foundation, the American

Public Health Association, and Partnership for Prevention,2009

7 NHS report 20098 WHO, 20089 Stern Report 200510 ONS, 2010

Accelerating complexity: Regulatory trends in the consumer goods industry 3

Understanding regulatory trendsTo more fully understand the historical patterns of regulatory evolution – an important lens to use when considering where future regulation mayarise – Deloitte UK undertook a global research exercise to understand how regulation has evolved and how it currently translates across multiplemarkets and industries. As indicated in figure 3, the ‘deep-dive’ global research looked at eight types of regulation across 13 countries globally.

Figure 2. The intersection of regulatory drivers

Public Healthand societal

EnvironmentalFiscalpressure

Food

AlcoholTobacco

The intersection of regulatory drivers:The intersection of the three key regulatory driversleaves the food industry particularly vulnerable to futureregulation (see Figure 2). Tobacco and, to a lesserextent, alcohol, have both historically been impacted bythe fiscal and public health/societal drivers of regulationin many countries. By contrast, food has beencomparatively less regulated, although increasing publichealth and fiscal concerns put areas of the foodindustry more firmly within scope for future regulation.Simultaneously, while all three industries will beimpacted by environmentally driven regulation, themore resource-intensive nature of the food industryleaves it the most exposed to future regulation.

Figure 3.

3. On packaging health warning

4. POS information

5. Advertising restrictions

6. Sale and possession

7. Point of consumption

8. Product taxes

2. Product labelling

1. Product content

Types of regulation

Tobacco

• Reduction in permissible levels of tar and nicotine

• Move towards plain packaging

• Increasingly explicit health warnings including graphics

• Compulsory warnings around POS and restrictions on advertising

• From limiting advertising to complete ban in most places

• Age limits

• Restrictions on where you can smoke and bans in some countries

• Substantial excise duty rises well ahead of inflation used as a key control measure

Alcohol

• Limitations around the contents of alcohol

• Growing use of health warnings

• Proactive engagement of industry to provide on-pack warnings

• Information about age restrictions, also health warnings

• Changing restrictions around when and where advertising can appear

• Changing licensing laws driven by political and economic climate

• Restrictions on where you can consume alcohol e.g. transport, work

• Excise duties seen as a way to modify consumption behaviours, for example to lower intake of alcohol content beverages

Food

• Early restrictions on unnatural, harmful additives

• Ingredients labelling and nutritional content

• Nutritional content displayed as a warning

• Little sign of POS regulation except in menu labelling

• Advertising restrictions for certain foods, especially when concerning children

• Vending machine content restrictions in schools

• Move towards stricter guidelines on the content of food served at schools

• Expecting product taxes to be used to encourage healthier eating and more sustainable consumption choices

4

Regulatory “cascade” – regulation crossingindustries and markets in accelerating timescalesOver the past forty years, there has clearly been anidentifiable cascade in the regulatory and tax burdenfrom more harmful to less harmful product categoriessuch as food, with accelerating timescales.

In tobacco, following decades of increasingly stringentadvertising regulations, the most restrictive regulationseen thus far – a total ban of on-pack branding inAustralia – is currently passing through the Parliament.Many health professionals anticipate this ban will havea significant impact on tobacco sales, though theunintended consequences such as impact on the illicitmarket are not fully understood.

Historically, restrictions around product purchase andconsumption have impacted the alcoholic beverageindustry (e.g. liquor license laws, age limits, and drunkdriving restrictions). Additionally, advertising laws andproduct taxation have impacted the alcohol industry.The WHO encourages member nations to “influencethe price of alcoholic beverages, for instance bytaxation”. More recently, labeling of alcohol units hasbeen applied by the UK government to encourageconsumers to make sensible choices for their healthwithout restricting consumption. The measure has metwith mixed reviews, with criticism being leveled thatguideline unit amounts are misunderstood byconsumers.11

Recent guidelines and regulations around food labeling,such as the voluntary display of GDA (Guideline DailyAllowance) information on the front of packaging in theEU, have sought to educate consumers on the dangersof less healthy products. More stringent regulationtargeting the less healthy characteristics of particularcategories of food products is anticipated.

Deloitte’s research also shows that key pieces ofregulation in one market are often followed by similarinterventions across other markets, Australia was anearly adopter of legislation around the display oftobacco products at point-of-sale in 2000, restrictingthe product to the seller side and not less than 1 meteraway from any part of the customer service area.Mexico applied a similar measure in 2008, when it wasruled that cigarettes at point-of-sale must be placed insuch a manner that consumers do not have direct accessto them.12

Increasingly prohibitive – incremental regulatoryadvances increase severity of regulatory mapAs demonstrated in the tobacco industry, regulation canoften be incremental, increasing in severity over time.For example the early health warnings on cigaretteswere typically small and text-based.

11 Drinkaware, 201112 The International

Document Centre, 2011

Figure 4. Regulatory cascade across markets and industries

Mar

kets

Developed*

Less Developed*

Developed: Countries withhigh GDP per capita and thattypically have relativelyadvanced regulatory bodiesto monitor the consumerproducts industries.

Less developed: Countrieswith moderate GDP percapita and that typically haverelatively less advancedregulatory bodies to monitorthe consumer productsindustries.

Emerging: Countries withlow GDP per capita thathave little regulation tomonitor the consumerproducts industries.

Emerging*

1970 1980 1990 2000 2010

TobaccoAlcohol

Food

Tobacco Alcohol Food

Accelerating complexity: Regulatory trends in the consumer goods industry 5

Eco-labeling

Monitoring ofpositive claims

Carbon taxation

Voluntarymeasures

• Eco-labelling of food products is being considered under the European Food Sustainable Consumption and Production RoundTable and the EU Ecolabel program. The European Energy Label is now compulsory for consumer electronics products and the EUEcolabel program has introduced a flower logo to promote the products with the lowest environmental impact.

• The use of positive claims to promote products as less harmful to public health and the environment, such as ‘organic’ or ‘local,’are carefully monitored to ensure accuracy of usage. Any claims to being organic or environmentally friendly must besubstantiated and not mislead customers.13 In the UK, the Advertising Standards Authority keeps a close watch on organic claimsin the same way as positive health claims. Advertising regulation generally states that junk food advertising cannot encourage anunhealthy lifestyle or excessive consumption; this is yet to be applied more broadly to advertising claims about environmentalbenefits.

• The carbon footprint of a bar of chocolate is low relative to consumer technology but the scale of the industry means that thechocolate industry may be impacted by carbon taxation on the lifecycle of consumer products. If a person consumes an average-sized chocolate bar every other day for five years, they produce a similar carbon footprint to the use of an iPad over its lifetime.Consumer packaged food products may be affected by carbon taxation because of the scale of consumption.14

• Carbon taxation on the agricultural industry would impact chocolate, as 60% of the 169g carbon footprint of a Cadbury’s Milkchocolate bar comes from the dairy farmers that produce the milk. Agriculture accounted for about 8% of total UK Greenhouse Gas(GHG) emissions in 2008 according to the UK GHG inventory.15 However, targeting the farming industry would be a complexundertaking for any government, given concerns about the security of food supply and a growing world population.

• Many chocolate manufacturers are facing pressure about the environmental impact across their supply chain. In 2008 Cadburycreated the Cocoa Partnership together with the UN Development Agency to improve the economic, social and environmentalconditions of farmers. Fairtrade and the Rainforest Alliance certify coca which is produced by sustainable farming practices thatreduce soil erosion, water pollution, and excessive use of fertiliser and pesticides. However, companies pay a premium for rawmaterials that support their responsible business claims.

Figure 5. Potential exposure of a chocolate bar to environmentally-driven regulation

Over time a number of markets have increased the sizeof these warnings whilst also introducing increasinglygraphic images to accompany the warning. Somecountries, such as Australia, are now contemplating amove to plain packaging which would effectivelyremove all company branding from the pack, replacingit with large graphic health warnings.

Summary – particular exposure of the food industryto increased regulationWith the food industry comparatively less regulated inrelation to the public health/societal and fiscal driversthan the tobacco and alcoholic beverage industry, thecascade of regulation across sectors suggests that theindustry is particularly exposed to increasing severity ofregulatory interventions in the future. Additionally, thetrend has been for less developed and emergingmarkets to adopt regulations first introduced indeveloped markets. Given that such adoption seems tobe accelerating it is likely that in the future all threesectors will face increased regulation across bothdeveloped and developing markets and that the lagbetween adoption in more developed markets anddeveloping markets will become ever shorter.

Implications for consumer products companies,governments, and regulators – shifting frompassive acceptance to proactive engagementA better understanding of the impact of regulationon business and society can help consumer productscompanies and governments make well-informeddecisions that have a positive and sustainable influenceon both patterns of consumption and economicperformance – providing a win:win for consumersand business.

The consumer products companies’ standpoint –understanding exposure, prioritizing investment,and engaging with regulatorsConsumer products companies need to develop a goodunderstanding of their exposure to regulatory change ineach market but the changing regulatory picture acrossmarkets makes this a complicated endeavor.

Chocolate provides a useful example of the way inwhich several factors can potentially intersect to createa regulatory risk for a consumer goods company.The product is not only linked to rising healthcare costsbut its production can also have a negative impact onthe environment. Figure 5 below outlines some of theenvironmental regulations that could increasingly affectchocolate manufacturers.

13 Defra’s Green ClaimsGuidance(2011) providesadvice to business forclear, accurate, relevantand substantiatedenvironmental claims onproducts; Updates to thePolish Code of Ethics inAdvertising stated that“In general, claims to be“environmentally friendly”must be substantiated”,2008

14 The most commonmethod of comparingthe environmental impactof different consumerproducts takes intoaccount the carbonemissions of eachstage of the productlifecycle, including rawmaterials, productions,transportation,consumption and disposal

15 Foresight, ‘The Future ofFood and Farming’(2011); The GovernmentOffice for Science,London

6

In our experience the most successful businessesprioritize their investment of time and resources,engaging early on with key regulatory issues, especiallyin beacon or high-profile markets. Multi-nationalbusinesses are particularly challenged in this regard,as they face a global patchwork of regulatory activityand successful engagement requires resources and skillsthat are often in short supply.

The government standpoint – effective regulationmust benefit the government and consumers Governments also face important challenges in thisarea to ensure that new regulations are appropriatelytargeted and effective in achieving their objectives.This is particularly the case where governments areattempting to develop new regulations (such as theplain packaging of tobacco) or applying existingregulations to new markets (such as some of thecurrent debate on food regulation).

Much of the regulation in this area is focused onattempting to alter ‘voluntary’ behavior through theuse of a combination of price, education/information,and restricted availability. However the deep-set natureof many consumption patterns means that this canbe difficult to achieve in practice, especially in theshort-term.

16 SBA (2010), ‘The impactof regulatory costs onsmall firms’

17 British Chambers ofCommerce (2009), ‘Costof regulation on Britishbusiness rises to£77 billion’

18 British Chambers ofCommerce (2011), RPCannual report issuedMarch 8, 2012

This creates complex policy trade-offs that may bedifficult to analyze completely. For example, the cost tobusiness of an advertising ban may be immediate andsubstantial in terms of reduced commercial freedom,inability to bring new products to market, and so forth.However, the effect of the ban on consumptionpatterns (presumably the objective of the regulation)may only be realized over the very long-term, makingit difficult to assess the efficacy of the policy.

Furthermore, even where regulations are effective inachieving their primary objectives, is should also berecognized that these can drive other economic orsocial costs. For example, one study found that theannual cost to the economy of federal regulation inthe U.S. alone exceeded US$1.7 trillion.16 Another studyfound that 19 new regulations had been introduced inthe UK in 2007-08, costing UK businesses an additional£1.9bn.17 A similar study found that more than aquarter of all regulatory proposals were deemed ‘not fitfor purpose’.18

The most effective regulatory frameworks typicallyrecognize the need to understand clearly who benefitsand who feels the pinch from the regulation. The abilityto quantify these costs and benefits is often an essentialstep in evaluating the net impact of the policy. In itswork with regulators and businesses across the globeto evaluate regulatory impact, Deloitte has found thatquantifying the costs and benefits of regulation worksmost effectively where industry and governmentengage in ongoing open and constructive dialogue,pooling their common knowledge to generate asaccurate a picture as possible about the impacts ofa proposed regulation.

Quantifying the costs and benefits ofregulation works most effectively whereindustry and government engage in ongoingopen and constructive dialogue.

Accelerating complexity: Regulatory trends in the consumer goods industry 7

Regulatory case studies By working with leading consumer productscompanies, Deloitte member firms have hadthe opportunity to build and refine a set oftools to quantify and manage the impact ofregulatory risk on a global scale. There iscertainly no ‘one-size-fits-all’ toolkit forquantifying and managing regulatory risk –drawing on Deloitte’s global base of industryknowledge and experience, member firmstailor the toolkit to the individual needs oforganizations. The selected case studies belowhighlight just some of Deloitte’s experience inhelping member firm clients manage theburden of regulatory risk and identify theopportunities it brings.

Case study 1: a multinational beverage companyDeloitte provided a major multinationalbeverage company with a comprehensive setof tools to identify and manage regulatory risk.The tools deployed include an intelligence-ledearly warning system to identify regulatorychanges, as well as a robust and transparentrisk analytics tool to quantify financialexposure of the firm. Deloitte also supportedthe development of a comprehensiveengagement toolkit for each of the firm’send markets to use to inform their ownapproach with government. This wassupported by an economic impact model thatprovides quantified evidence to help providerigor in the arguments being put forward.

Case study 2: international tobacco groupRecognizing the importance of evidence-ledengagement with policy makers, BritishAmerican Tobacco (BAT) commissionedDeloitte UK to undertake an independentevaluation of the effectiveness of graphichealth warnings in influencing consumption.The report undertook one of the mostcomprehensive econometric studies to date,covering 27 markets over 14 years. Thefindings were produced in a public domainreport by Deloitte that BAT is now usingactively to support their discussions withgovernments across the globe.

How do you get started?As a consumer products company facing a changingglobal regulatory landscape, here are several keyquestions to consider:

1. Have you yet made the shift from a reactive to aproactive stance on regulation? Is this embeddedin the business culture?

2. Where are you focusing your attention with respectto fiscal, health, societal, and environmentallydriven regulation?

3. How visible are future regulatory changes and theirpotential impact in the different geographicterritories in which your organisation operates?

4. Do you have a process to understand, analyze andrespond to regulatory changes – including a toolkitto engage regulators effectively across your countryoperations?

5. Do you have the people, skills and capabilitiesrequired to implement effectively the necessaryprocesses to deal with regulatory changes?

Deloitte brings a unique and proven approach thattranslates a strategic regulatory risk vision into anactionable and comprehensive plan to pool existingresources (for example across the Corporate Affairs,Enterprise Risk, Strategy, and Finance functions) andtools to meet the demands of a changing regulatorylandscape. At a high level, this approach:

1. Defines a vision, strategy and role of a regulatoryrisk management capability and assesses thecurrent position against the required level ofcapability centrally and in-market.

2. Establishes a regulatory risk capability comprisedof policies, procedures, roles, responsibilities andsupporting quantitative tools (for example,a predictive model and portfolio risk map).

3. Implements the regulatory risk capability in aphased approach centrally and across marketsin a way that effectively embeds the tool inbusiness-as-usual processes.

8

Representative tools and methodologiesThe tools that Deloitte has helped clients to establish have two broad aims: to understand and to manage proactively the value at risk from regulatorychanges. Deloitte’s ability to help companies develop and deliver such tools rests on the broad strategic, economic, consulting, tax and enterprise riskskill sets that exist across Deloitte member firms. The outputs from these tools have been proven to support organizations in their constructivedialogue with governments, regulators and industry bodies. Please see below for a more detailed description of the Deloitte regulatory risk toolkits.

Imperative to take action

Desired features

Example tools

Understanding the value at risk

• Rapidly changing nature of risks.

• Early and effective deployment of resourcesimportant to achieving successful outcome.

• Ability to quantify risk so that it can be comparedagainst other risks and business priorities.

• Global in nature.

• Transparent and accepted methodology.

• Outputs can be produced to meet the needs of awide range of stakeholders.

• Global risk analysis for clients.

• Supported by intelligence reports on regulatorydevelopments in each market.

Managing the value at risk

• Engagement with stakeholders and governmentmost likely to succeed when evidence based.

• Provides new and compelling insights to grab theattention of stakeholders.

• Results seen as credible.

• Analysis can be adapted to examine a wide rangeof possible regulatory interventions.

• Comprehensive engagement framework for clients.

• Supported by economic impact models todemonstrate overall regulatory policy effects.

Figure 7. The Deloitte toolkit for regulatory risk

Figure 6. Actionable response to regulatory risk

ReviewMonitorTest

Define vision and role ofregulatory risk capability

Assess currentperformance and

capabilities

Design and test ‘proofof concept’ tools

Roll out phase 1:Proof of concept

Roll out phase 2:Widespread adoption

and embed in BAU

• Plan and communicateroll-out to wider set ofterritories.

• Build skills and capabilitiesto generate energy aroundregulatory risk to encouragewide scale adoption oftool(s) through: training,guiding teams, best-practiceforums.

• Embed into BAU: e.g. enableskills transfer into relevantteams, enhance existingreporting process to includemeasurement and monitoringof regulatory risk.

• Identify primary group of high regulatory riskterritories and productcategories.

• Roll out proof of concepttools to priority territories.

• Engage policymakers inconversation regardingstrategic regulatorydevelopments.

• Capture and consolidatefeedback from territories.

• Iterate toolkits andprocesses where required.

• Design, develop and test regulatory riskquantification andmanagement tool(s) such as:

– predictive quantitativemodel, portfolio riskmap; and

– supporting policies,procedures, roles andresponsibilities.

• Leverage client toolswhere feasible.

• Enhance existing and/ordevelop new enablingtechnology, where required.

• Investigate existingmodels, databases andtoolkits to quantify andmanage value at risk.

• Understand existingcapabilities and resourcesaligned to regulatory risk.

• Perform gap analysis toshow the current versusrequired level of capabilityto quantify and manageregulatory risk.

• Understand the widerstrategic context.

• Perform value at riskanalysis.

• Confirm stakeholderexpectations.

• Define vision and role ofregulatory risk strategyand managementcapability.

Prepare

Accelerating complexity: Regulatory trends in the consumer goods industry 9

The Deloitte network of member firmsWith a strong network throughout the Americas,Europe, Africa and Asia Pacific, Deloitte ConsumerProducts and Regulatory specialists combine deepindustry experience and understanding of regionalmarkets to help companies around the world succeedwherever they operate.

Deloitte member firms serve:

• All eight of the consumer products companies in theFTSE 100.

• Hundreds of other global, regional and nationalconsumer products companies around the world.

• Four of the world’s five largest brewing companies.

• Three of the world’s largest wine and spiritscompanies.

Deloitte member firm clients in the ConsumerProducts industry include:

Anheuser-Busch InbevAvon Products Inc.CarlsbergChina Resources National CorporationClorox Company The Coca-Cola Company Columbia Sportswear CoDanoneFEMSA Grupo BimboGrupo ModeloKraftL’Oreal NestléProcter & Gamble CompanyReckitt BenckiserSABMillerWacoal International Corp

ContactsConsumer Products contacts for Deloitte ToucheTohmatsu and its member firms.

DTTL Global Consumer Business Industry LeaderAntoine de RiedmattenDeloitte Touche Tohmatsu Limitedaderiedmatten@deloitte.fr

Latin America Consumer Business LeaderReynaldo SaadDeloitte Brazilrsaad@deloitte.com

Asia Pacific Consumer Business LeaderHaruhiko YahagiDeloitte Japanhyahagi@tohmatsu.co.jp

Consumer Products LeaderJack RingquistDeloitte Consulting LLPjringquist@deloitte.com

Regulatory Leader, Consumer ProductsSam BlackieDeloitte UK sblackie@deloitte.co.uk

Consumer Business Propositions LeaderLeon PietersDeloitte NetherlandsLeonPieters@deloitte.nl

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and itsnetwork of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/aboutfor a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.

Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multipleindustries. With a globally connected network of member firms in more than 150 countries, Deloitte brings world-classcapabilities and deep local expertise to help clients succeed wherever they operate. Deloitte’s approximately 182,000professionals are committed to becoming the standard of excellence.

DisclaimerThis publication contains general information only, and none of Deloitte Touche Tohmatsu Limited, its member firms, ortheir related entities (collectively, the “Deloitte Network”) is, by means of this publication, rendering professional advice orservices. Before making any decision or taking any action that may affect your finances or your business, you shouldconsult a qualified professional adviser. No entity in the Deloitte Network shall be responsible for any loss whatsoeversustained by any person who relies on this publication.

© 2013 Deloitte Global Services Limited

Designed and produced by The Creative Studio at Deloitte, London. 28675A

Member of Deloitte Touche Tohmatsu Limited