While taxes on sugary drinks are generally a more recent trend, Finland started levying an excise duty on such products in 1940, and Norway first implemented a tax on soft drinks in 1981. Currently there are over 50 countries with taxes on the production, distribution or sale of sugar-sweetened beverages as a means of combating the potential adverse health effects of sugar. The mixed results of taxes on reducing sugar intake, however, have governments considering alternative approaches.
Evidence from a recent study from the University of North Carolina at Chapel Hill, shows that combining written and graphic health messages (pictures) on the packaging of drinks is more effective than text-only warnings to reduce the consumption of sugary drinks.
Another study from Aberdeen University found that restrictions on promotions, ie, buy-one-get-one-free, are often more effective than taxation to reduce consumption. However, studies state that the efficacy of such measures depends on multiple other factors, and that sugar reduction should be seen as a multidimensional problem.
Marketing, merchandising and packaging will be the new frontline for sugar reduction
The global COVID-19 pandemic has consumers striving for health and wellbeing. According to Euromonitor International’s 2021 Health and Nutrition Survey, 28% of global survey respondents seek to avoid sugar through beverages. While taxation has been the primary approach over the last decade, public health regulators and companies are exploring three alternative strategies.
Restrictions on availability and marketing
Restrictions on the availability of sugary drinks in schools and healthcare facilities have proven effective, and soon on-trade and retail channels could be potential targets for restrictions. However, the pandemic has shown that consumers are quick to adapt to new channel distribution and can change their consumption accordingly.
Prohibiting on-pack advertising and brand packaging through "plain packaging"
Warning text labels have already impacted consumption in Latin America, forcing companies to move ahead with reformulations to reduce sugar content. Another industry alternative focuses on packaging changes to reduce portion sizes. More extreme measures could be brought forward following the example of plain packaging in the tobacco industry – advocates such as the IPPR (Institute for Public Policy Research) in the UK support this type of measure for the drinks industry.
Countertop commerce, home preparation and the new role of sugar
At-home preparations could help reduce sugar consumption by migrating consumers away from drinks with high sugar content. On the other hand, the role of sugar continues to change in the assortment of consumption occasions, and the desire for sugar reduction is unlikely to be uniform throughout the day. Companies addressing those new need-states will find it easier to reduce sugar.
For more insights on how the industry is approaching sugar reduction and the potential impacts of alternative legislation please see the full report, Global Soft Drinks in 2022: Alternative Approaches to Sugar Reduction.