Getting to grips with the ‘sugar tax’: now is the time to act
With less than a month to go until the implementation of the Soft Drinks Industry Levy, now is the time for operators to be prepared, and put new ideas and solutions in place. This is a huge period of change for the industry, but it should be considered as an opportunity for innovation in your soft drink offering.
Insight from our suppliers has suggested that products which contain the highest amounts of sugar could see a percentage increase for operators of up to 35%, albeit on low volume items. Most used items such as individual mixer bottles will be increasing by around 10% on average, and high-volume post mix products for full sugar soft drinks could see increases of up to 20% on average. Therefore, implementation of a price variation for customers, between full and reduced sugar offerings, would be a smart business move for many operators across the hospitality industry, and goes hand-in-hand with the rising trend of healthier food and drink choices by consumers.
There has been a major surge in embracing a healthier approach to food and drink consumption, possibly partly due to the public becoming more aware of, and potentially influenced by, sugar content.
As a result, we are seeing low calorie soft drinks significantly outperforming full sugar options. According to our supplier Brakes, in terms of YOY volume growth, full sugar drinks have seen a 1.4% increase whereas low calorie drinks have seen much larger growth of 14.6%. Consumers are already opting for lower calorie alternatives, which could prove beneficial to operators, giving them the opportunity to adjust their prices and differentiate between low and full sugar options, with minimal detrimental effect.
Now is also the time for operators to stock a soft drink levy ready range, which reacts to rising consumer demand for a healthier beverage choice as well. Customer experience is more important than ever, so aim to offer innovative soft drinks, lower in sugar but perfectly served, to stand out from the crowd.”
‘Sugar tax’: the facts
The government proposed a new levy on soft drinks containing added sugar in April 2016, with the aim of tackling and reducing obesity in the UK. Implementation of this is now imminent, coming into place on Friday 6th April, 2018.
There will be no tax on drinks with less than 5g of sugar per 100ml, a lower rate of 18p per litre on drinks with 5-8g of sugar per 100ml, and a higher rate of 24p per litre on drinks with 8g+ per 100ml. This relates to all applicable drinks sold in the UK, both manufactured in the UK and imported.
By Paul Connelly, Managing Director at Beacon