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Coca-Cola could face £226M sugar tax

By James Ridler+

06-Jun-2016
Last updated on 06-Jun-2016 at 12:48 GMT2016-06-06T12:48:12Z

The soft drinks sugar tax could cost Coca-Cola £226M a year
The soft drinks sugar tax could cost Coca-Cola £226M a year

The Coca-Cola Company could face a bill as high as £226M a year under the sugar tax, if it doesn’t pass on the increased charge for its sugary drinks to consumers, according to market research firm Euromonitor.

While pricing strategy specialist James Brown of Simon-Kucher & Partners has suggested the tax would mostly be passed onto consumers, other sources have suggested the costs could be absorbed by the company itself.

Other companies that could face high bills included: PepsiCo (£48M), Lucozade Energy owner Suntory Holdings (£46M) and Capri-Sun owner Deutsche SiSi-Werke (£29M).

Euromonitor also claimed that if product formulations and sales of soft drinks remained the same as in 2014, the top five contributors to both new tax categories proposed by chancellor George Osborne in his surprise budget announcement on March 16 ­– more than 8g and 5–8g of sugar per 100ml – would end up contributing £374M in sugar tax a year.

In a report released by Euromonitor – as part of its Passport Nutrition database – it claimed the UK consumed more sugar per person than the average global consumer.

High amounts of sugar

The sugar tax – to be introduced in the UK in April 2018 – will see a charge levied on soft drinks that contain high amounts of sugar.

Euromonitor nutrition analyst Sara Petersson claimed that reducing the amount of sugar the public consumed was important for the well being of the public.

“Many public health bodies such as those in Mexico, Chile and the UK have been stressing the importance of reducing sugar in our diet,” said Petersson.

The aim of the levy is to combat childhood obesity, but many drinks manufacturers claimed that a sugar tax was not the answer.

J2O producer Britvic said a “wide-ranging strategy” was needed to tackle obesity and that “singling out soft drinks alone will not solve the obesity problem”.

Coca-cola said the tax was “disappointing” and it “flies in the face of evidence from around the world which shows taxes do very little, if anything, to reduce sugar and calorie intake or obesity levels.” The company also said the levy would “add to people’s cost of living.”

93g of sugar a day

On average, UK consumers purchased 93g of sugar in packaged foods and soft drinks a day, with 21 grams coming from soft drinks in 2014, claimed Euromonitor.

The firm also forecast that global purchases of sugar from packaged food and soft drinks would grow by 8.7Mt by 2019 if product formulations remained the same.

Meanwhile, the proposed sugar tax on soft drinks was likely to fail in its intended aim of reducing calorie intake as consumers would simply trade down to cheaper, own-label variants, a leading legal food specialist has claimed.

Taxation, even if workable, also didn’t address the “fundamental challenges” posed by more sedentary lifestyles, according to Dominic Watkins, partner and head of food at DWF.

 

Top five companies paying the sugar tax if their products aren’t reformulated
  • Coca-Cola: £226M
  • PersiCo: £48M
  • Suntory Holdings: £46M
  • Deutsche SiSi-Werke: £29M
  • Tesco: £10M

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