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Sugar tax ‘best option’ to limit escalating health problems, says Credit Suisse

By Oliver Nieburg+

13-Sep-2013
Last updated the 13-Sep-2013 at 11:23 GMT

The threat of tax may encourage food and drink businesses to step-up high-intensity sweetener use, says Credit Suisse
The threat of tax may encourage food and drink businesses to step-up high-intensity sweetener use, says Credit Suisse

A sugar tax is the best way to combat excess sugar consumption which doctors agree is partly to blame for growing global obesity and diabetes rates, according to a report from Credit Suisse.

The financial services firm has published its report ‘Sugar: Consumption at a Crossroads’ where it surveyed doctors across the globe on attitudes towards sugar. The majority agreed that sugar was addictive and responsible for type II diabetes.

Type II diabetes link

“As with alcohol and tobacco, higher taxation on drinks is the best option to reduce sugar intake and help fund the fast growing healthcare costs associated with diabetes type II and obesity,” said the report.

The majority of doctors surveyed (90%) said excess sugar consumption was strongly linked with the rise of type II diabetes and 65% agreed that sugar was addictive.

One of the authors of the report, Stefano Natella, co-head of securities research & analytics at Credit Suisse, said: "Although causality is difficult to prove in this area, with such a high percentage of doctors in our proprietary survey confident of this strong link, we cannot ignore the significance and the implications for society and our economy."

The Association of Chocolate, Biscuit and Confectionery Industries (CAOBISCO) previously called for a halt to ‘discriminatory’ food taxes and argued that there was no such thing as unhealthy foods, only unhealthy diets.

The rise of diabetes

According to the Credit Suisse report, type II diabetes is growing at a rate of 4% per year as obesity rates climb 1-2%, with around 370 million worldwide people are classified as obese.

Levies On Sugar

Some countries have already acted to curb rising sugar consumption. Denmark for example has a DKK 24.61 (€3.57) per kilo excise levy on chocolate and sweets, a DDK 6.61 (€0.89) hike per litre of ice cream and a DKK 1.64 (€0.22) tax per litre of soft drink.

In 2012, almost as many people died from diabetes (4.8 million) as did from smoke related disease (5.6m), said the report.

The finger is being pointed at sugar with soft drinks the biggest culprit. But the report did acknowledge that the effect of sugar intake largely depended on a person’s genetic make-up.

Sugar consumption far above recommended levels

The American Heart Association recommends six teaspoons of added sugar a day for women and nine for men.

However, the global average sugar consumption is 17 teaspoons, and the rate is much higher in some countries.

The US consumes more than any nation at 40 teaspoons, with added sugars accounting for 17% of a normal US diet - the majority coming from sweetened beverages.

Mexican consumption is also high at 35 teaspoons, while Brazil, Argentina and Australia are others with a big sweet tooth.

The report said that those with higher incomes and with higher levels of education were moving away from full calorie soft drinks to diet options.

“However, this trend appears to be slowing as amid growing concern related to artificial sweeteners.”

Formulate with high-intensity sweeteners

Coke launched stevia-sweetened product Coca-Cola Life in Argentina earlier this year

Credit Suisse expects the food and beverage industry to move towards ‘healthier’ options in the face of a regulatory clampdown.

The beverage industry has already begun to self-regulate by introducing zero calorie options with high-intensity sweeteners.

Credit Suisse expects the beverage industry to suffer in the short term, but feels it will soon adapt its market strategies to embrace change.

“Ultimately, companies that develop or help develop high-intensity natural sweeteners are poised to be the primary beneficiaries of the change,” it said.