The Sugar Tax: A Tax On Taste?

Steve Perez of Global Brands looks at how the incoming Sugar Tax could impact on consumers and producers alike

Steve Perez Global Brands

A major concern for the drinks sector in 2018 will, undoubtedly, be the impact of the sugar tax coming into force in April.

I think most would agree that the health issues surrounding sugar are important. But the new levy essentially amounts to a tax on taste.

It needlessly punishes drinks manufacturers – many of whom are UK-based small and medium-sized businesses. It makes it more difficult for them to meet consumer demand for new and natural flavours.

It’s bad for customers, bad for businesses, and bad for the economy.

Whatever your view, the fact is the Sugar Tax is coming. Our soft drinks and mixers range, Franklin & Sons, is one of the many UK brands that will be affected. We’ve had to put a lot of time and effort into how we can change the range without impacting the taste and our commitment to using natural flavours and ingredients that prove so popular with Franklins & Sons’ customers.

Thankfully for us, only a small number of Franklin & Sons products fall into the high tax band and 40 per cent of the range is completely exempt (containing less than five grams of sugar per 100ml). However, it’s still a shame that people who like one flavour of drink will have to pay more for this than say another flavour that contains less natural sugar. People are being penalised for their taste preference.

For the products set to be hit by the tax, we had to put a plan together. Our approach wasn’t rooted in how to reduce exposure to the tax. Instead, we stayed true to our customers by putting taste first in whatever decision we made. 

The whole Franklin & Sons range was developed to provide adults with a premium, natural flavour. We simply wouldn’t switch to using artificial preservatives and sweeteners. Our customers don’t want this.    

In fact, our own market research has discovered that between forty and fifty per cent of drinkers are willing to pay more for a premium taste and natural flavours.

For us, losing the unique and natural flavour that customers expect poses a far greater risk than having to marginally raise prices in line with the tax.

Where we were able to reformulate without detracting from the taste profile of our drinks, we did. But we refused to make any changes that compromised the flavour. For us, and our customers, quality will always trump price. 

We’re sorry to fans of our Ginger Beer who may be paying a little bit more for the drink they love next year. But hopefully they will agree with us that the small increase is better than sacrificing the taste profile they expect from our product. 

For many soft drinks brands there is a difficult balance to be struck between compromising taste through use of artificial sweeteners and avoiding a price increase that turns away customers.

The true impact for them, and the UK businesses that sell their products, might not become clear for some time. The same can be said for whether we’ll see the sugar tax deliver its perceived health benefits.

16 January 2018