Sugar tax to hit consumers amid reformulations to escape levy
The sugar tax on soft drinks will hit consumers from Friday but health campaigners have hailed the extent of reformulations that will see many brands escape the levy.
Manufacturers of soft drinks containing more than 5g of sugar per 100ml will pay a levy of 18p a litre to the Treasury, or 24p a litre if the sugar content is over 8g per 100ml, with the cost passed on to retailers and customers.
The Government and health campaigners hope the higher prices will put consumers off buying the most sugary drunks and lead to a significant decline in obesity.
Original Pepsi and Coca-Cola Classic are two examples of formulations that are remaining intact due to customer demand, and will therefore attract the levy, with the cost of a 330ml can of the original Coca-Cola, containing around seven teaspoons of sugar, likely to rise by around 8p plus VAT.
Wetherspoon chairman Tim Martin said prices on soft drinks in pubs would increase by about 10p as a result of the tax.
But more than 50% of manufacturers have changed their formulas to cut sugar, according to figures last month from the Treasury.
The Office for Budget Responsibility (OBR) estimates the levy will raise £240 million in 2018-19 as a result, less than half the £520 million it was expected to raise when the Government first announced the move at the 2016 budget.
Tesco has reformulated all of its own-label soft drinks to come in below the threshold for the levy, claiming the changes have cut more than nine billion calories from customers' diets every year, as have Morrisons, Asda and The Co-op.
Tesco said it would continue to stock a full range of branded drinks, which could be more expensive or come in a smaller serving size, but estimated 85% of all the drinks it sells would be exempt from the levy.
A Co-op spokeswoman said: "The levy is designed to be passed onto customers and drive a change in consumer behaviour so, for branded soft drinks that do qualify, we will pass on the cost of the levy and the VAT."
Britvic said 94% of its drinks, including Robinson's Refresh'd, Purdey's and Tango, are below or exempt from the levy, with this figure dropping to 72% of Britvic's total portfolio including PepsiCo and the original Pepsi.
A Coca-Cola Great Britain spokeswoman said: "Coca-Cola Classic is one of the few brands that will be subject to the new tax as we have decided not to change the recipe. Consumers tell us not to change it and we believe they should be able to choose a Coca-Cola Classic if that's the drink they want.
"If they want a Coca-Cola without sugar, we have Diet Coke and Coca-Cola Zero Sugar, which will not be subject to the tax."
Coca-Cola is also replacing its 1.75 litre Coke Classic bottle with a 1.5 litre bottle, which will limit the price rise, and increasing the size of its 1.75 litre Diet Coke and Coca-Cola Zero Sugar, which are not subject to the tax, to 2 litres.
Irn-Bru has reformulated its famously sugary recipe to avoid the tax, cutting the sugar in a can from 8.5 teaspoons to four, despite a consumer backlash and reports that fans were stockpiling cans and bottles of the original.
A spokesman for the drink's maker A.G. Barr said: "Irn-Bru continues to be made using the same secret Irn-Bru flavour essence, but with less sugar. The vast majority of our drinkers want to consume less sugar so that's what we're now offering.
"We ran lots of taste tests that showed most people can't tell the difference, nine out of 10 regular Irn-Bru drinkers told us we had a good or excellent taste match."
However the British Soft Drinks Association said there was no evidence to suggest that a tax of this sort would have a meaningful impact on obesity.
It said sugar intake from soft drinks had been declining year-on-year since 2013 and yet NHS figures showed that obesity prevalence increased from 15% in 1993 to 27% in 2015.
Coca-Cola Great Britain said: "There is no evidence from anywhere in the world that shows taxing soft drinks reduces obesity rates.
"We were reformulating our drinks to reduce their sugar content for many years before the tax was announced, we've done 34 reformulations since 2005, and there is ample data which shows that the sugar people consume from soft drinks has declined significantly over the last decade and continues to do so. As that has happened, obesity rates have continued to rise."
Ben Reynolds, deputy chief executive at the food and farming charity Sustain, said: "We championed a sugary drinks tax primarily to benefit children's health, and already we have seen a rapid reaction from the soft drinks industry in reformulating products.
"Whilst this is only one way to tackle the problem, we hope that the higher price of sugary drinks and increased awareness leads to less consumption of sweet and sugary products."