Coca-Cola: 60% of portfolio will fall below UK sugar tax threshold
The soft drinks industry levy will tax added sugar drinks that contain a total sugar content of 5g or more per 100ml.
Coca-Cola European Partners says the new Coca-Cola Zero Sugar brand – its new calorie and sugar free alternative to the classic Coca-Cola – enjoyed 8% growth in the latest quarter across its territories.
Retailers will determine final price of drinks
“While the introduction of [sugar] taxes will clearly be a headwind in 2018, we have been proactively tailoring our portfolio to low and no sugar variants for a number of years,” said Manik H. Jhangiani, CFO, Coca-Cola European Partners, during the company’s Q3 2017 earnings call.
“We have continued working with The Coca-Cola Company on reformulation, and a lot of top brands that are driving our growth are coming from the sugar-free variants. Importantly, we know our consumers want choice and their taste is very important in beverages.
“Looking at Great Britain, we expect that approximately 60% of our portfolio will fall below the industry tax threshold when it is introduced in April.
“That said, the remaining 40% of the portfolio will be subject to tax, notably two brands, Coke Classic and Monster Green.”
The UK sugar tax will have two tiers: one for beverages with sugar over 5g/100ml and the second for those with sugar over 8g/100ml.
Coca-Cola Classic, for example, will fall into the upper band: containing 10.6g sugar per 100ml in the UK.
“As we've said before, we will be passing this tax on to our customers,” continued Jhangiani. “However, when it comes to consumer prices, they, our customers have the sole discretion on setting the final price.”
The company has accelerated support for flavors and low sugar colas and will continue to invest in its core brands such as Diet Coke, Coca-Cola Zero Sugar, Fanta and Sprite, continued Jhangiani.
By 2025, 50% of Coca-Cola sales in Western Europe will come from low or no calorie drinks: an increase from 35% in 2016, the company announced this week.
“We will continue to reformulate across the portfolio ensuring that taste is at parity or better than the recipes that it replaces. And we will also introduce new products and flavors to the market as well.
“Coca-Cola Zero Sugar, Smartwater and Monster Ultra are excellent examples of where we've had considerable success.”
Coca-Cola's portfolio in Great Britain includes trademark Coca-Cola brands, Glaceau smartwater, Fanta, Sprite, Oasis, Powerade, Minute Maid and Honest Tea.
Coca-Cola trademark portfolio
In its quarter ended September 29 2017, the Coca-Cola trademark portfolio declined 4.5% by volume across Coca-Cola European Partners’ 13 territories (Great Britain, Belgium, Luxembourg, France, Germany, Iceland, Netherlands, Norway, Portugal, Spain and Sweden).
However, CCEP reports ‘strong growth’ of 8% from its new Coca-Cola Zero Sugar (also known as Coca-Cola No Sugar in some other markets), the sugar and calorie version of Coke it has been rolling out globally.
The beverage has been launched to offer consumers a low calorie drink that comes closer in taste to Coca-Cola Classic.