Tax & admin · 5 April 2018

Sugar tax arrival makes drinks brands think

The UK’s tax on sugary drinks will see consumers asked to pay 18p or 24p more per litre.

 

The UK’s so-called “sugar tax” comes into effect tomorrow, forcing drinks brands to take a new approach to production.

Half of soft drinks businesses have cut sugar levels in preparation of the sugar tax which comes into force on Friday 6 April, ministers have claimed.

The sugar tax was introduced to battle obesity and will see a tax introduced on sugary drinks across the UK.

Since its announcement in 2016, drinks companies have been experimenting with their recipes to reduce sugar content.

Commenting on the new approach, managing director of Ayming, Martin Hook, said: “Drinks companies have gone back to the drawing board across all their products. They have been steadily making their drinks healthier to combat obesity – sugar free and diet versions have been around for some time.

“But recently there’s been a scramble to find innovative ways to rethink manufacturing processes and successfully reduce sugar content, without a potentially profit devastating change in taste.”

According to Treasury figures, drinks will contain 45 million fewer kilos of sugar overall in the effort to avoid a levy.

Drinks containing more than 8g of sugar per 100ml will be taxed at 24p per litre and drinks with over 5g per 100ml charged an 18p levy.

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The tax has been proposed to help fund sports activities in schools across Britain, as teenagers are thought to consume nearly a bathtub-full of sugary drinks each year.

The estimated amount was £500m which has now reduced to £240m as some companies have removed excess sugar from their products.

“Companies need to strike the right balance between reducing new tax costs and avoiding a consumer backlash,” said Hook.

Big players in the beverage market such as Irn-Bru cut sugar from 10.3g to 4.7 per 100ml, Ribena cut sugar from 10g to less than 4.5g per 100ml and Lucozade cut sugar from 13g to less than 4.5g

Hook added: “It’s encouraging to see so many companies rolling out new products – the core Ribena and Lucozade owned products for example have cut sugar by 50 per cent.”

However, the Pepsi no recipe change remaining at 11g per 100ml similar to Coca-cola which remains at 10.6g per 100ml.

A concern that the market has is that big brands will refrain from reducing their sugar content and simply reduce the size of their products instead.

Hook added: “Looking ahead, it’s likely the research will continue as the developed markets push in a healthier direction, so manufacturers should keep the ball rolling, take a long-term view and continue successfully developing more consumer-friendly products.”

Read more: Food industry challenged to cut calories 20 per cent by 2024

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ABOUT THE EXPERT

Carly Hacon is a reporter for Business Advice. She has a BA in journalism from Kingston University, and has previously worked as a features editor for a local newspaper.

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