The introduction of selective taxes on soft drinks according to sugar content during December 2019 had a major impact on sales of soft drinks generally, including better for you beverages, towards the end of the review period. In particular, these new taxes have raised consumer awareness of the importance of their soft drink choices in reducing their sugar intake, while category players have realised the need to offer a wider selection of better for you beverages.
Rising social media use during 2020 played a significant role in the strong performance recorded in better for you beverages as consumers were more exposed to the marketing campaigns of the category’s leading brands via social media. With the principles of home seclusion and social distancing major influences on consumer behaviour during the year, many people were more inclined to spend time online, which meant that soft drinks companies turned to online channels to capture the attention of their core consumer basis.
The nature of the selective tax on sugar has meant that in some soft drinks categories, mainly carbonates, many better for you beverages are being taxed at the same rate as the regular, full-sugar versions. This has created pressures in the category as manufacturers have struggled to justify investment in the FY reduced sugar variants if they are not able to avail themselves of the tax advantages that should flow from the sale of such beverages.
Towards the end of the review period, the leading manufacturers of instant coffee mixes in the United Arab Emirates introduced numerous sugar free variants in reduced sugar instant coffee. These low-sugar instant coffee mixes have proven very appealing among a young consumer audience who are interested in convenience as much as they are interested in consuming healthy products.
The forecast period is expected to see sales of reduced sugar concentrates emerge strongly in the United Arab Emirates, with the category expected to emerge from its current negligible sales and niche status. The key factor behind this anticipated trend is the recent launch by Mondelez International of the low sugar version of its iconic powder concentrates brand Tang.
The advent of the selective tax on sugary beverages in the United Arab Emirates during the review period had a profound effect on the product ranges available in various categories of juice. In particular, a much wider range of reduced sugar juice drinks (up to 24% juice) is now available, with products containing high levels of sugar and low amounts of juice increasingly struggling to attract consumers.
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This report originates from Passport, our Better For You Beverages research and analysis database.
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