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The UK Sugar Tax – An Update

The UK Sugar Tax – An Update
13/04/2018

Soft Drink Industry Levy and Price Rises The long-anticipated tax on fizzy drinks has finally come into effect in the UK, meaning many soft drinks firms are now facing hefty tax bills on the high sugar-sweetened beverages they produce or import.

The Soft Drinks Industry Levy (commonly referred to as ‘The Sugar Tax’) will add an extra 18-24p per litre on some fizzy drinks, depending on their sugar content.

Prices of drinks in pubs and restaurants are also included in a bid to try and tackle the UK’s obesity epidemic.

A while back when the levy was first announced, we looked at the options available for soft drink manufacturers to ensure their businesses don’t suffer because of the sugar tax. Some of these options included reformulation using sugar substitutes or putting prices up and risk putting off customers.

This blog article provides an update on the sugar tax and how the industry has responded to the levy.

Companies Rushing to Reformulate The Office for Budget Responsibility (OBR) expects the sugar tax will raise around £240 million in its first year, which is proportionally less than the £520 million that was originally put forward when the government first announced the proposal at the 2016 budget.

This is largely due to soft drink manufacturers embracing a proactive approach to the levy and reformulating their product portfolio or launching no/low-sugar alternatives. In fact, more than 50% of manufacturers have modified their formulas to ensure their products are below the sugar tax threshold.

As a reminder, the lower band requires soft drink companies to pay a tax on drinks containing 5 grams per 100 millilitres of sugar whereas the higher bracket requires companies to pay tax on drinks containing 8 grams or more of sugar on every 100 millilitres. Drinks with low levels of sugar are below the threshold, and therefore are exempt from the tax.

So, how did the soft drinks industry react to the Sugar Tax?

Replacing Sugar with Artificial Sweeteners The majority of manufacturers have gone down the route of replacing sugar with artificial sweeteners. AG Barr, maker of Irn-Bru, an iconic Scottish soft drink, has reduced the sugar content by over half and it now has 4.7 grams of sugar per 100ml instead of 10.3 grams.

However, this controversial move has caused uproar amongst its large fan base, with thousands of individuals signing an online petition called “Hands Off Our Irn-Bru”. There were also reports in January of Irn-Bru fans stockpiling cans of the original soft drink in preparation for the sugar tax.

A similar manoeuvre was made by Ribena, who, in the two-year transition period, cut its sugar content by half. It’s modified recipe now contains less than 5 grams of sugar per 100ml bottle having been replaced by the artificial sweeteners Acesulfame K and Sucralose in a bid to maintain its taste.

For more information on  The UK Sugar Tax – An Update  talk to  Hygienic Pigging Systems Ltd

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