Soft drinks industry ‘ahead of the game’ as UK sugar tax looms
The industry’s exposure to the levy has fallen by more than £200m ($283m), says Britvic quoting figures from Nielsen, thanks to ‘significant innovation’ in the form of product reformulation.
Meanwhile low and sugar carbonates continue to grow as consumers seek out healthier options; while water and water plus categories experienced strong growth as drinkers place more importance on healthier hydration.
The UK’s Soft Drinks Industry Levy comes into effect on April 1, taxing added sugar drinks with a total sugar content of 5g or more per 100ml.
Paul Graham, GB managing director, says the industry has seen a huge amount of innovation over the last year.
'Last year we saw a huge amount of innovation and reformulation across the board, probably more so than was expected'
“There is no doubt that it has been another interesting year for our category as manufacturers really got to grips with the impending soft drinks industry levy and how best to navigate it,” he said.
“It feels to me like the industry has got ahead of the game and last year we saw a huge amount of innovation and reformulation across the board, probably more so than was expected.
“Health remains front of mind for consumers when choosing a soft drink and I am proud that our industry is playing its part in removing millions of calories from people’s diets and offering them great tasting, healthier soft drinks solutions.”
The UK’s sugar tax will have two tiers: a lower rate for drinks with 5g sugar per 100ml and a higher rater for those with 8g/100ml.
Earlier this year a report from The Office for Budget Responsibility (OBR) said that income from the impending levy would be less than half of that originally announced by the UK government, thanks to ‘aggressive reformulation’ by the industry.
It predicted that the levy will raise £240m ($340m) in its first year, compared to the £520m ($736m) originally projected.
The government has praised reformulation efforts, having previously stated that the focus of the levy was on driving reformulation.
By next April, 72% of Britvic’s total portfolio and 94% of its owned brands will be below or out of scope of the Soft Drinks Industry Levy in Great Britain. In Ireland (where a similar tax is due to be introduced in parallel) 69% of its total portfolio and 79% of its owned brands will escape the levy.
Other companies and brands have also made significant reformulation efforts: Lucozade Ribena Suntory’s Lucozade Energy now contains 50% less sugar; while A.G. Barr has reformulated its flagship Irn Bru to contain 50% less sugar as well as developing an 'unprecedented' number of new recipes.