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New Soft Drinks Sugar Levy in the UK: Successful Obesity Strategy or Punishment to Some?

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2014 Passport nutrition data shows that the average UK consumer buys around 34kg of sugar each year. According to Public Health England (PHE) 2014-2015 data, 9% of four to five year olds in the UK are classed as obese, and the recent finding that currently five year olds consume their body mass in sugar each year was just one of the incentives to make a change. However, following UK Tory MP George Osborne’s announcement of a sugar tax on sugar sweetened beverages (SSB)* (meant to come into place in 2018), much debate has been focused on whether the new legislation will be successful at tackling the problem, and who will be the ones to suffer the most?

16g of sugar per capita per day from SSB alone

The UK government recommends that for people aged 11 years and over, no more than 5% of their total energy intake should come from added sugar, which equates to approximately 30g of sugar a day. Euromonitor International data shows that the average UK consumer purchases 93g of sugar from packaged food and soft drinks per day, of which 16g comes from SSB alone (excluding 100% juice).

The new sugar levy is expected to raise £520 million – is this feasible?

Drinks will fall into two tax bands: those with 5-8g of sugar per 100ml, and 8g of sugar per 100ml or more; an additional tax of £0.18 and £0.24 per litre will be applied to these, respectively. 100% juice, drinking milk products and yoghurt and sour milk products will be excluded from the levy, along with products which fall under the 5g of sugar per 100ml threshold.

Based on 2014 per 100g Passport nutrition data and corresponding brand retail volume sales from soft drinks, the top five contributors from both tax categories (>8g and 5-8g of sugar per 100ml) would provide £374 million in sugar tax a year (based on 1:1 kg to litre conversion).

Top five contributors of sugar tax in the >8 g per 100ml sugar tax band, based on 2014 Passport nutrition data and the planned 2018 tax levy.

Brand name Drinks category Contribution in sugar tax (£ million)
Coca-Cola (The Coca-Cola Co) Standard regular cola 158
Pepsi (PepsiCo Inc) Standard regular cola 48
Lucozade Energy (Suntory Holdings Ltd) Energy drinks 46
Dr Pepper (The Coca-Cola Co) Other non-cola carbonates 44
Capri-Sun (Deutsche SiSi-Werke GmbH & Co KG) Unfrozen juice drinks 29
Total 325

Top five contributors of sugar tax in the 5-8g per 100ml sugar tax band, based on 2014 Passport nutrition data and the planned 2018 tax levy.

Brand name Drinks category Contribution in sugar tax (£ million)
Fanta (The Coca-Cola Co) Juice-based orange carbonates 15
Schweppes Tonic Water (The Coca-Cola Co) Tonic water 10
Sprite (The Coca-Cola Co) Non juice-based lemonade/lime 10
Tesco (Private label) Tonic water 10
Emerge (Cott Corp) Energy drinks 4
Total 49

The WHO estimates that approximately 42 million children under the age of five are overweight or obese, and some, such as Prof Susan Jebb, argue that taking on a more “nannying” approach is necessary. Popular child-targeted soft drinks such as Capri-Sun (unfrozen juice drinks) and Tropicana Kids (unfrozen nectars) will also be taxed, at the higher and lower tax bands respectively. However, many arguably similar child-targeted products will be excluded.

100% juice products (excluded from the levy) may contribute to as much as 5g of sugar per capita per day. Interestingly, some popular 100% juice products, such as Welch's Purple Grape Juice, Innocent Smoothie and Tropicana Orange Juice, contain as much as 17g, 11g and 10g of sugar per 100ml, respectively.

Similarly, milk-based drinks such as Frijj and Yazoo provide approximately 10g of added sugar per 100ml (the same as Coca-Cola), and may contribute up to 4g of sugar per capita per day. Nevertheless, due to their relatively small contribution to overall sugar intake and relatively high retail price, it is unlikely that applying a sugar tax to these would make any significant change.

Some of the highest-selling brands which fell under the 5g of sugar per litre per 100ml threshold in 2014 were Volvic Touch of Fruit (Groupe Danone), Lucozade Sport (Suntory Holdings Ltd), Robinsons Fruit Shoot (Britvic Plc), Schweppes Lemonade (The Coca-Cola Co) and Oasis (The Coca-Cola Co).

The new tax legislation is expected to raise £520 million, of which £160 million would be used for sports programmes in primary schools across the UK. If the formulations and sales were to remain the same as in 2014, the £520 million target seems achievable. Nevertheless, brands have until 2018 to reformulate their products, which could mean they fall into the lower tax category, or may need to pay no extra tax.

In 2013 regular Sprite has reformulated to contain 30% less calories, by replacing sugar with the natural sweetener Stevia. If all SSB brands were to do the same, this could lead to as much as a 486,000 million reduction in calories purchased per year, in the UK alone.

Sugar-sweetened beverages are an easy target for tax

There are several reasons why sugary soft drinks are a great target for a sugar levy. Firstly, SSB add no nutritional value to one’s diet. All energy is derived from so-called “free sugars”, with a typical soft drink such as Coca-Cola delivering approximately 7 teaspoons (or 35g of sugar) per can. Secondly, research on the effects of carbohydrate form (liquid vs solid) on satiety shows that these calories are not compensated by a reduction in energy intake from other foods later in the day (Pan et al, 2011). Thirdly, as opposed to foods such as chocolate, cakes or biscuits, soft drinks are perceived as less of a threat. In reality, however, they are a rather calorific substitute for plain water and unsweetened tea or coffee.

Sugar tax – what has the past taught us?

Even though SSB may seem like a good target, implementing a sugar tax on drinks has not always proven successful. Both Mexico and Chile imposed a sugar tax on SSB, in 2014 and 2015 respectively, but showed very different results. While the Chilean 13-18% IEPS tax led to a clear boost in sales of low calorie cola at the expense of regular cola options, in Mexico this was not the case. Instead, following the addition of MX$1 per litre sugar tax, sales of low sugar cola options remained flat, while sales of regular cola declined by a small 3%.

Is the sugar tax punishing those who are already suffering the most?

At the highest tax rate, the new sugar levy will add £0.08 per can of soft drinks, which translates to a mere 10% additional tax on a product such as a 330ml can of Coca-Cola. However, it could almost double the price of some private label drinks, as products such as Sainsbury’s own standard regular cola sell for as little as £0.28 per litre. This could mean that low-income consumers take the biggest hit, and alongside, sales of private label brands.

In addition, sugary soft drinks are an important remedy for type 1 diabetics, who often experience hypoglycaemia, and adding a sugar tax has thus sparked some controversy. According to a recent BBC article, "Sugar tax - will it unintentionally penalise diabetics?", sugary drinks such as Lucozade are a necessity, rather than a luxury that should be taxed, and the price increase might have an unintentional impact on the families of those affected.

Sugar levy – a price to pay with no reward?

The problem with childhood obesity in the UK is undeniable, and targeting the biggest contributor of sugar consumption may help in tackling the problem. It is possible, however, that the new legislation will have no significant effect on public health, and will only penalise a proportion of the market. Provided product formulations and sales remain the same as in 2014, private label and discounter brands, whose biggest selling point is their unbeatable low price, might be the ones taking the biggest hit of all.

On the other hand, The Coca-Cola Co may find itself on the receiving end of a £158m sugar tax bill, and this is for regular Coca-Cola alone. However, with as little as a 10% price mark-up on a can of coke, Coca-Cola and other leading players may politely insist on UK consumers footing the bill; the sugar tax effectively transforming into what could prove a costly exercise in testing the limits of brand loyalty.

*SSB – This includes: Flavoured Bootled Water, Functional Bottled Water, Cola Carbonates, Non-Cola Carbonates, Concentrates, Cereal/Pulse-based Drinks, Fruit-Flavoured Drinks, Juice drinks (up to 24% Juice), Nectars (25-99% juice), RTD coffee, RTD tea, Sports and Energy Drinks, Asian Speciality Drinks.

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