Post Sugar Tax - Where next for soft drinks?
The sugar tax levy was introduced into the UK in April 2018. The levy poses a tax of 18p per litre on drinks with a sugar content of between 5% and 8%, rising to 24p for drinks with more than 8% sugar. When the levy was first described 2016, the Treasury predicted it would raise £520 million in the first year. In fact, in March 2018 this was revised to less than half at 240 million, of which up to 90% would probably come from the higher rate tax largely paid by the two key players and their enshrined cola secrets.
So, is this a successful tax? In short, from a public health perspective it has certainly helped. The lower than predicted revenues have arisen from aggressive reformulation by the SDI which means that the amount of sugar most consumers are getting from soft drinks has been reduced. The Chancellor may not be so happy! And the true impact on the nation’s health will only be realised over generations to come.
This reformulation by the industry has not come without serious challenges: sugar is a difficult beast to mimic delivering unique mouthfeel (body) and sweetness release properties that the alternative high potency sweeteners cannot easily replicate. The skill of the industry is evidenced by the statistic that 62% of consumers say they have not changed their purchase behaviour post tax. They have but they haven’t noticed! They may not have even noticed any change in price – the fact that this is a company, and not a sales tax, gives manufacturers the opportunity to spread the cost implication across its whole soft drink range rather than focus on individual SKUs.
So where next for soft drinks? Probably not far, as the industry has been leading the way in providing products that better safeguard the nations health. The wider question is where next for the food industry – is it all about sugar or is the real issue calorie reduction in a nation of coach potatoes? Our workshop on 7th February 2019 explored all aspects of the sugar levy and its impact on formulators and consumers. You can see the programme and learn more about the speakers, Paul Isherwood, John Fry, Darren Staniforth and Pamela Beyts, here. To receive a copy of the presentations please email to email@example.com.