Assessing the UK Sugar Tax Two Years On
The Soft Drinks Industry Levy (SDIL), often nicknamed the “sugar tax”, came into effect in April 2018. It was introduced as part of the 
government’s initiative to tackle rising rates of obesity and type 2 diabetes by encouraging manufacturers to reduce the sugar content in their beverage products.
Drinks covered under the sugar tax include soft drinks such as cola, lemonade and Irn-Bru as well as sports and energy drinks. Drinks such as fruit juice that contain high levels of natural sugar and drinks with 75% milk (and a high calcium content) are exempt from the tax.
It’s over two years since the tax was initially introduced. This blog article looks at the UK Sugar Tax and the impact the levy has had on the drinks industry and public health. It also examines what the future holds in terms of further action on sugar.
If you’ve not already, make sure you have a read of our previous articles on the Sugar Tax:
The Sugar Tax – What’s the (Sweet) Alternative?
Sugar Tax – Will It Be Extended to Confectionery?
An Overview of the Sugar Tax
The UK has one of the highest obesity rates among developed countries. According to statistics by NHS Digital, more than a quarter of adults in England are classified as obese. What’s more, 20% of children aged 10-11 (Year 6) are obese.
As a category, soft drinks are the biggest source of calories and added sugar in children’s diets. Hence, the reason the category was the primary target of the levy.
The Sugar Tax puts a charge of 18p per litre on beverages with sugar content between 5 grams and up to 8 grams per 100ml. The higher rate (24p per litre) applies to drinks with sugar content equal to or greater than 8 grams per 100ml.
The levy was forecast to raise around £520 million in revenue which would help fund physical activities in primary schools. It would also be allocated to the Healthy Pupils Capital Fund and provide a funding boost for breakfast clubs in thousands of schools throughout the UK.
Has the Sugar Tax Been a Success?
Although two years has passed since the Sugar Tax was initially introduced, it’s still in its early days. Research is currently being conducted in the UK trying to evaluate the effects the tax has had on the consumption of soft drinks, prices, obesity, diabetes and so on. But, so far there hasn’t been anything conclusive that confirms all of the impacts. And particularly for obesity and diabetes, any development on these will take more time to reflect, resulting from the potential changes in consumer behaviour.
However, without a doubt, the sugar tax has certainly been successful in reducing sugar in children’s drinks. That’s because many beverage manufacturers have gone down the route of reformulating their high sugar beverage portfolio to either put them in the lower tax band, or removed them from the tax completely.
Therefore, the initial estimation of £520m in revenue is now believed to be around £240m, because of company efforts to reduce sugar from their products.
How have Soft Drinks Been Reformulated?
A small percentage of manufacturers have chosen not to reformulate some of their products. Instead, choosing to absorb the tax or pass the price increase onto the customer.
However, the route taken by most beverage manufacturers has been to reformulate their beverages and replace sugar with traditional artificial sweeteners. Instead of sugar, manufacturers are using artificial sweeteners including saccharin, acesulfame, aspartame, neotame, and sucralose. Natural sweetener stevia is also being incorporated into many beverages.
Reformulation has been a challenge for manufacturers, with research and development teams working hard to ensure their reformulated products maintain their taste, while containing significantly less sugar.
And using sweeteners is not without its problems. Although refined sugar is detrimental to health, there is no conclusive evidence that artificial sweeteners are any better.
Further Actions on Sugar
The British Medical Association, Action on Sugar and other health lobbyists want the government to extend the sugar tax to even more products. There has been calls for the levy to be extended to milk-based drinks as well as confectionery items such as chocolate, biscuits, and cakes – many of which contain high amounts of sugar.
Research conducted by Queen Mary University of London found that 97% of cakes and 74% of biscuits contain unnecessary amounts of sugar. So, while there’s been reductions in the sugar content of beverages, the consumption of sugar in other products is still a major problem. This is despite voluntary sugar reduction targets that were implemented to encourage manufacturers of confectionery, biscuits, cakes and so on to reduce sugar in their products by at least 20% by 2020.
Although some food categories have successfully reformulated and reduced their sugar content considerably, many categories such as biscuits and puddings struggled to meet the target. In fact, puddings increased in sugar content.
Therefore, a sugar tax on sweets and confectionery may have to be mandatory as voluntary industry self-regulation alone will not combat obesity. It’s likely only a matter of time.
Implications of Reformulation
Reformulation is a major challenge for manufacturers of confectionery, dairy products, snacks, and similar food type items.
With these products, better-for-you attributes, and nutritional benefits are greatly appreciated by customers. At the same time, taste is the number one criterion for many customers when making a purchase decision. Because of this, significant compromises on taste are not very well accepted.
Sugar is fundamental to taste as well as texture and mouthfeel for confectionery products. So, there are many complex challenges that must be resolved if manufacturers are to reduce the sugar content while meeting the high expectations of the customer.
The Problem with Taxing Confectionery Products
If a tax is enforced on confectionery products, manufacturers may decide to pass the price increases on to the customer rather than reformulating.
There’s also a chance that consumers may be willing to pay the higher prices. After all, chocolate and confectionery, by its very nature, is an indulgence-led purchase.
The majority of people consuming chocolate and confectionery are fully aware of the sugar content and potential health implications if not consumed in moderation. Yet, they still choose to treat themselves.
What’s more, in recent years there’s been a significant increase in premium and luxury product launches in the UK. Customers are demanding these products and are willing to pay a premium for them. Therefore, it’s highly unlikely that higher prices will reduce consumption.
What’s Next?
The current UK government has hinted on more taxes to come. But only time will tell.
It’s quite clear that a wider approach to overhauling unhealthy eating habits is needed to have any real, lasting impact on public health.
Although taxes on soft drinks and potentially other food items are a move in the right direction, it’s still going to take more action to tackle obesity. So, don’t be surprised to see more transparent food labelling, more stringent regulations, and a focus on education from an early age in the foreseeable future.
What’s This Got to Do With HPS?
HPS Product Recovery Solutions are the world’s leading specialists in pigging, liquid product recovery and transfer solutions for companies that process liquids. Food and beverage manufacture as well as chocolate and confectionery are a few of our key industries.
Download our Free Guide to Liquid Product Recovery (Pigging)
Our proven, high-performance solutions are providing these companies with a high return on investment and quick payback. This is through increased yields, reduced waste, faster changeover times, increased efficiency, lower water consumption and much more. Here’s more on the benefits of pigging systems.
While our solutions can’t resolve the dilemma in regard to taxes on food, confectionery and beverages, they can certainly be used as a sustainable strategy to improve the efficiency of food and beverage processing, allow the manufacture of a greater variety of products while minimising efficiency losses, and significantly boosting the bottom line.
Contact HPS
To find out more about how to improve your processes through hygienic (sanitary) pigging technology, then please get in touch: