Better For You Beverages in Chile

PROSPECTS

Labelling law and possible new sugar tax drive better for you beverages in Chile

As the labelling law enters its second phase in Chile, the sugar war has intensified. In 2018, labelling requirements became stricter, while the content of fat, sugar, calories or sodium permitted for a product to avoid having to display a black label was lowered.

Low production costs and narrower price differentials create strong growth opportunities

Raw material prices, taxation and end prices are creating a win-win situation for soft drink companies keen to develop reduced sugar beverages, while meeting the government’s public health targets. This is because the price of sugar is higher than prices of alternative artificial sweeteners, while the sugar tax increases the gap from a production point of view.

Reduced sugar content does not guarantee a healthy image

Retail volume and current value sales of reduced sugar versions contracted in powder concentrates and juice drinks (up to 24% juice) in 2018. While some consumers may have migrated from regular to BFY versions, many moved to perceived healthier drinks, especially when seeking beverages for children.

COMPETITIVE LANDSCAPE

Coca-Cola looks to reduced sugar alternatives

Coca-Cola has reported a reduction of 33,700 tonnes of sugar in its beverages; and it aims for a further reduction of 3,400 tonnes in 2018. The company expects that one half of its sales will come from sugar-free or reduced sugar products by 2020.

Reduced sugar flavoured bottled water continues to see strong sales growth

Flavoured bottled water is regarded as the closest alternative to carbonates when looking for healthy alternatives. Sugar reduced flavoured bottled water is considered an even better alternative.

Companies adapt to a changing business environment

The tax rates of 18% for sugar drinks and 10% for reduced sugar drinks contributed significantly to the widening offer of reduced sugar soft drinks in Chile. Higher taxation also encouraged more consumers to choose reduced sugar options.

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