Last week the Chancellor announced in his budget that there will be a new sugar tax on the soft drinks industry.
It’s been on the cards for a while now, with the likes of Jamie Oliver and several high profile campaigners bidding for years for this result. With many claiming this result takes them one step closer in the fight against obesity.
Focusing on the larger, most popular fizzy drinks, the amount of sugar content in one drink will now relate to how much tax is paid by the soft drink company. As the BBC describes there will essentially be two bands – one for total sugar content above 5g per 100 millilitres and a second, higher band for the most sugary drinks with more than 8g per 100 millilitres. Analysis by the Office for Budgetary Responsibility suggests they will be levied at 18p and 24p per litre.
The likes of Coca-Cola, Lucozade Energy and Irn-Bru will be part of the higher tax. The lower rate will include drinks such as Dr Pepper, Fanta, Sprite, Schweppes Indian tonic water and alcohol-free shandy. Pure fruit juice and milk based drinks are omitted from the tax.
So the government has given businesses two years to get their ducks in order, before the tax levy hits. Giving companies enough time to modify their product mix and promote low sugar items.
So how does this affect the consumer? As the soft drink companies are said to pass on the cost of the levy onto consumers, with the increase in drinks set to come into effect in 2018. However this doesn’t come as a surprise as the main reason for the tax is to deter child obesity, which will be a result of less people consuming the high sugar drinks, reducing the amount of high sugar content a child drinks on daily basis
Soft drink companies and the industry overall has reacted in different ways to the news. A selection have embraced the change and heralded it a success, committed to changing the way their products are consumed and perceived. However others believe it to be absurd and just motivated by politics
Either way it’s here to stay, so it’s essential brands work with their retailers and retail experts to ensure that during these two years are focused on planning and developing. Consumers need to be communicated to and any new developments on lowering sugar levels are shared with customers and retailers, in a positive and forward thinking way.
A lot of brand’s will be pushing NPD during these next two years, again a brand needs to listen to the consumer and their needs and make the product work for them, as well as keeping to the new sugar tax regulations. Retail audits, sampling and trial periods will be crucial for brands to succeed and to continue to be the leading brands in their arena.
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