Food & Drink

Will UK sugar tax take fizz out of drinks industry?

Britain’s sugar tax on soft drinks came into effect on Friday, a move that will lead to some higher prices as the country seeks to battle childhood obesity. Kate King looks at whether it may also mean slimmer margins for drinks manufacturers.

(REUTERS/BBC) – On average British children drink nearly a bathtub of sugary drinks each year.

So, some find the taste of the government’s

new sugar tax a bit sour.

PEOPLE AGAINST SUGAR TAX, BROOK WHELAN,

“Taxes should be there to help the functioning and running of government, they shouldn’t be there to be dictating people’s choices.”

Friday marks the first day of the levy,

which will see consumers pay as much as 24 pence for drinks which fall foul of the government’s sugar levels.

It’s all part of Britain’s battle to reduce childhood obesity.

But the big question – will higher prices, reduce consumption?

UNKNOWN SHOPPER,
“I’m on a low sugar diet right now and I look at every ingredient I give my son. Sugar needs to be taxed, it needs to be out of our diets, it’s a really good thing.”

50% of manufacturers have already reformulated their products,

to be below the threshold.

And of the UK’s big four supermarket chains, only Sainsbury’s has not changed the recipe for its entire range.

Leading brands such as Lucozade, Ribena, and Fanta have cut the sugar content of their drinks – as have Coco-Cola

though it’s classic beverage, the nation’s top-selling branded soft drink, is subject to the tax.

CHIEF INVESTMENT OFFICER, CCLA INVESTMENT MANAGEMENT, JAMES BEVAN,

“We do have evidence from Mexico and the states that there is a degree of substitution to lower sugar drinks and therefore the real winners in the drinks companies are those who have lower sugar formulations that retain consumer demand.”

It’s tax revenues which may fall a little flat ….

Due to the recipe changes, the UK Treasury now expects the levy to only raise about 240 million pounds in its first year,

less than half of what it first forecast.

In England, that money will be invested in schools sports and breakfast clubs.

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