The soft drinks sugar levy came into force last week (Fri 6th April) and Chancellor Phillip Hammond had hoped it would generate some £520m to more school sports facilities.
A number of drinks manufacturers used the time the government gave them, between first announcing the levy in 2016 and implementing it last week, to change their recipes to avoid the new tax.
Therefore, while we think the levy will go some way to reducing sugar intake, the work that manufacturers have done to reformulate some products to contain less sugar, means it will leave a significant hole in the Chancellor’s plans.
It’s estimated now that less than half of the anticipated £520m will be collected, despite Mr Hammond already committing money to fund new school sports facilities.
There are strong suggestions from within government that fizzy drinks are therefore just the start of the sugar tax process, and other high sugar products such as cakes, confectionary, and biscuits could be next.
In terms of bulk buying, we have seen an increase of more than double the usual volumes going through March, as people are looking to stock-pile product and take advantage of the pre-tax pricing.
Most of our members are now engineering their menus to reduce the amount of higher sugar products they are selling.
For example, where they were previously stocking Pepsi, they are now taking it off the shelves, and stocking Pepsi Max, instead. We believe this trend is something that is going to continue for the foreseeable future.
If the Government is truly serious about tackling obesity, it won’t succeed in doing it through the soft drinks levy alone, so this is just the beginning.
It’s yet another challenge for those within the food and beverage industry to address.