03 Apr 2018 --- A controversial sugar tax billed as a new health-promotion levy by the South African government has just started. Designed to support the Department of Health’s aim to reduce the incidence of diabetes, obesity and related diseases, the levy is 2.1 cents per gram of sugar content that exceeds four grams per 100ml (the first four grams per 100ml are levy-free) and sugar content includes added sugar and other sweetening matter.
And by the end of this working week, the long-awaited sugar tax will be in force in the UK as well, pushing up the price of sugar-sweetened soft drinks across Britain. In Ireland, a planned sugar tax will not come into effect until May 1, almost a month later than the April 6 date which was previously confirmed. In a statement from the Department of Finance, they said that Ireland has engaged in “extensive and constructive” discussions with the European Commission to ensure that once commenced, the sugar tax does not infringe on EU State aid law.” “Following these constructive discussions with, and formal notification to the European Commission, a positive decision is expected in the coming weeks to allow for the commencement of the tax,” the statement said. But a tax is coming there nonetheless.
Will the clamp down on sugar-laden soda lead to a healthier society? Time will tell, but for now, at least, the spotlight is on the initial reaction to the sugar tax in both Britain and South Africa regarding how much money the levies will bring in for government coffers and what effect it will have on obesity numbers.
The UK sugar tax has two tiers; a lower rate of 18 pence per liter for drinks with a total sugar content between 5-8g per 100ml and a higher rate of 24 pence per liter for drinks with total sugar more than 8g per 100ml.
The UK government and health advocates hope the new legislation will lead to a dramatic decline in childhood obesity in the country which last November was ranked as the most overweight nation in Western Europe. The UK’s obesity rate has risen faster than the US. This was according to a report by the Organization for Economic Cooperation and Development (OECD). Britain came out as the sixth-worst country in the study, behind Mexico, the US, New Zealand, Finland and Australia, with around 27 percent of the population now clinically obese and another 36 percent considered overweight.
According to UK government data, obesity prevalence increased from 15 percent in 1993 to 27 percent in 2015. And, in 2015/16, over one in five children in reception years (aged 4-5) and over one in three children in Year 6 of school (age 10) were measured as obese or overweight.
Some argue that an overall approach to a calorie-controlled diet is the key to stemming the obesity crisis, worldwide and not just in the UK, while other schools of thought single-out sugary soft drinks as one of the leading underlying causes of why children are consuming so much sugar and becoming obese.
One of the most striking international phenomena in recent years is how consumer attitudes towards sugar have changed – a key driver behind product reformulation, along-side the enforcement of legislation like the latest in the UK and South Africa.
Removing sugar from soda, encouraging portion control, and persuading kids to take ownership of their diets are just some of the tactics which have been underway in the UK for quite some time.
In part, this has been in preparation April 6, the moment when the UK’s sugar tax hits consumers in their pockets – the theory is a higher price tag will put off purchases.
Stripping out sugar – big players reduce sugar from beverage portfolios
Agile soft drink makers have already (and pledge to continue to do so) adapted recipes to avoid tax, but consumers still face inflated costs if they insist on the classic sugar-laden version of sodas.
2017 was characterized as a transition year as the food & beverage industry fine-tuned its adaptations and reformulations in preparation of several major policy changes – key among them being exactly what is happening on April 6 in the UK, as well as the banning of trans-fat in the US (June 2018).
The true impact of the sugar tax will not be understood in 2018 that’s for sure. It will take much longer for the effects of the sugar tax to show, at least regarding its influence on obesity figures.
And there could even be a shortfall in the soft drinks levy due to the aggressive reformulation and the shifting preferences of consumers making mindful choices of their own accord.
The UK government’s original predictions in 2016 for how much money the sugar tax would generate were approximately £520 million (US$640 million), however as producers continue apace to distance themselves from liability through new product offerings that are exempt from tax, could this figure be much less?
The impending tax has never been popular with the British Soft Drinks Association. Its position statement claims there is no evidence that food taxes affect obesity, citing how in 2013, Denmark scrapped its fat tax because of its economic impact and abandoned plans for a tax on sugar.
Also, evidence from France shows that while sales of soft drinks initially fell after a tax was introduced in 2012, they have increased since. In Mexico, the impact of a soft drinks tax saw a reduction of only six fewer calories a day, per person on a diet of more than 3,000.
The soft drinks sector also has an ambitious plan to reduce calorie intake from its products by 20 percent by 2020 – and plenty of reformulation work has already been done.
For instance, the makers of popular soft drink Irn-Bru, Scotland-based AG Barr, say that 99 percent of its portfolio will escape the sugar levy because of its focus on news recipes which includes reducing the sugar content of some products by up to 70 percent.
“In response to changing consumer requirements we have extended our innovation and reformulation program such that we have exceeded our original commitment on sugar reduction,” says AG Barr chairman John Nicolson.
“These actions have been taken in advance of the implementation of the soft drinks industry levy. The effort required across the whole business to deliver this commitment should not be underestimated and is a testament to both the skill and commitment of our people, as well as the agility and effectiveness of our business model.”
Coca-Cola has a reduced or no-sugar, no-calorie option for almost all drinks in its portfolio, offering more than 80 drinks across 20 different brands in Britain, which includes lower or no-sugar and calorie alternatives. All of its sparkling soft drinks – Coca-Cola Classic, Sprite, Dr. Pepper, Fanta and Lilt – have an “equally delicious sugar-free option,” it promises.
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Around one year ago, the Netherlands became the very first country
in which Coca-Cola revamped Sprite as a completely no-sugar and no-calorie soft drink
Around one year ago, the Netherlands became the very first country in which Coca-Cola revamped Sprite as a completely no-sugar and no-calorie soft drink and today the soda giant is celebrating sugar-free success after data shows there is an excellent match between supply and demand. In turn, this increases the potential for the sugar-free Sprite to be rolled out in other countries.
There was less success for the stevia containing Coca-Cola Life, at least in the UK, where it has been scrapped following flat sales. The distinctive green-labeled Coke Life was launched in the UK in September 2014 amid a fanfare that it contained third fewer calories than regular Coke and was sweetened using a mix of sugar and plant extract stevia. But it started to be phased out in June 2017 as consumer uptake did not meet expectations.
Natural sweetening solutions
Consumers are increasingly looking for natural sweetening solutions that help them reduce calories and sugars, but they’re not willing to sacrifice on taste. In fact, the most important benefit to a consumer when choosing a sweetener is that it’s “a good balance of taste and health.”
On the one hand, consumers are growing increasingly suspicious of sugar substitutes, even those marketed as “natural.” Stevia-derived sweeteners, for instance, can be the product of highly industrialized processes and consumers are becoming aware of this, prompting a likelihood that they may start to reject these ingredients.
Natural sweeteners, including stevia, have been trending amid the clean label boom and as 2018 is the year of actual legislative change, many ingredients suppliers are looking to innovate even further in the space of sugar reduction with new and emerging sweeteners, including stevia extracts.
Industry leaders say that stevia leaf sweeteners have come a long way since their inception regarding taste and functionality. The leading companies in this space continue investing in technologies that enable stevia-based solutions to allow for higher levels of sugar reduction.
Meanwhile, other alternative natural sweeteners are also being sought with innovation occurring with ingredients such as coconut sugar, date, honey and monk fruit to name but a few.
Passing down the cost
Coca-Cola South Africa says it expects people to pay more for added sugar variants now that the levy has taken effect. However, the soda giant offers a range of Coca-Cola products that will not be affected by the levy as they come in under the 4g/100ml threshold, as well as zero sugar products and 100 percent juices.
The Coca-Cola Company says it supports current recommendations of leading health authorities, including the World Health Organization (WHO), that people should limit their intake of added sugar to no more than 10 percent of their total daily calorie/energy intake and it will continue to work with the South African government to develop an effective anti-obesity solution that will meet the country’s health objectives.
Meanwhile, in the UK, popular pub chain Wetherspoons is putting up the price of soft drinks – and blames manufacturers for passing down the sugar tax, claiming this forces it to charge customers more. For instance, a Pepsi will go up by around 10p (US$0.14).
“Suppliers are passing it on to us and we are passing it on to the customer,” said the chairman of JD Wetherspoon, Tim Martin.
By Gaynor Selby
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