The sugar tax comes into effect today but if you’re still not sure what it entails and how it will affect you, here’s all the details
The sugar tax, also known as the Soft Drinks Industry Levy, was announced back in March 2016 and finally comes into force today. The aim of the levy is to curb rising levels of obesity and tooth decay by taxing high sugar content drinks (it’s estimated there are nine teaspoons of sugar in a 330ml can of cola, instantly taking children above their recommended maximum for the day).
With manufacturers given two years to reformulate their drinks and thereby avoid the charge, many have released low or zero sugar versions of their popular beverages. This means you could well find that many of the drinks you currently stock are below the levy and exempt from the tax therefore will incur no price increases at all.
Cost of the tax
So, how much is the tax and what drinks does it affect? There are two bands - an 18p per litre mid levy for drinks with 5g of sugar per 100ml and a 24p per litre higher levy for beverages with 8g of sugar per 100ml. This means a 330ml can of drink that falls within the mid levy price, say 7UP, will cost an extra 7p per can - or £1.68 per case of 24, while the same size can of classic Coca Cola, which falls within the higher bracket, will set you back an additional 10p - or the equivalent of £2.40 for a case of 24.
Soft drinks with no added sugars, pure fruit juices and soft drinks with 75% milk content are all excluded from the levy, while dilutable cordials, squashes and syrups will be taxed according to their sugar content once diluted.
Source: Coca Cola
To check the sugar content of the drinks you stock, simply look at the nutritional information on the back of your cans, bottles and cartons where the sugar content per 100ml will be clearly displayed. With the purpose of the sugar tax to encourage soft drinks manufacturers to reformulate their products, many drinks do in fact now fall below the tax threshold. AG Barr for example revised IRN BRU in January to feature 50% less sugar - down from 10.3g to 4.7g, while Coca Cola reformulated Fanta to contain 4.6g of sugar per 100ml rather than the previous 6.9g, a reduction of 33%.
However, some brands like classic Coca Cola, Pepsi and Red Bull have resisted changing their recipes on the grounds that it would compromise product quality. What they have done instead is create low or zero sugar versions to offer a wider choice.
When checking your drinks bear in mind that some, if they are old stock, may pre-date the reformulations, so if you’re unsure speak to your drinks supplier and they will be able to advise you. Most manufacturers’ websites also carry up-to-date nutritional information for their beverages.
Once you know how much extra you’re paying, it’s time to decide whether to pass this on to your customers or not. Of course, you don’t have to and that decision is entirely yours but it could eat into your profit margins if you continue to sell a lot of drinks above the threshold. Alternatively, you could be seen to be profiteering from the tax if you decide to increase prices across the board. Instead, shops are being encouraged to follow the spirit of the levy and create price differentials between high sugar and low sugar drinks.
This is the route Mark Drummond has taken at his takeaway, Towngate Fisheries in Idle, Bradford. However, rather than go for three price levels (below the levy, medium and high), he opted for a much simpler two-pronged approach. Mark comments: “I decided that we would have a differential in pricing, but that three levels were simply too complicated, so I went for two prices, below 5g sugar/100ml and above 5g sugar/100ml, so "With Tax" or "No Tax”."
Rather than naming specific drinks on his menu boards and leaflets, Mark has simply categorised the drinks as being below and above the levy, which easily allows for changes to his product mix.
Mark has also used the levy to reconsider what beverages he stocks and how he displays them, adding: “When I checked my cans, we only had Coke and two others that were over the 5g/100ml level, and the two others weren't big sellers, so I will discontinue these flavours and replace them with others under the tax threshold, so it will simply be Coke cans at the higher price and all others at the lower price.
“I have also rearranged my fridge to display the sugar free/low sugar drinks at eye level to promote their sales.
“I simply thought this was "the right thing to do, and in the spirit of the new tax, rather than simply keeping all the same price, or putting all up.”
With two-thirds of soft drinks sold in the UK now falling below the levy, the effect of the sugar tax is already being felt. And with more marketing budgets earmarked for low or zero sugar drinks, it’s likely sales of these - as well as water - will continue to grow, so now is not only a good time to look at your pricing but also the range you stock too.
In line with the Soft Drinks Industry Levy, Supermalt has launched a lower sugar version which contains less than 8g per 100ml.
The first reduced sugar malt drink on the market, the new recipe is a reduction of more than 30% compared to the original Supermalt drink, putting it into the lower tier of the levy. Supermalt Less Sugar contains no artificial sweeteners, instead the reduction in sugar is a result of adapting the brewing process.
Available in packs of 6x330ml bottles, it is supported with a range of POS.