Sugar Tax Now in Force
The government’s much-heralded Soft Drinks Industry Levy or SDIL for short is now underway. Manufacturers now have to pay a levy on the high sugar drinks they sell.
- Drinks with 8g sugar content or more per100ml will be taxed at around 24p per litre.
- Drinks with sugar content between 5g and 8g per 100ml will be taxed at around 18p per litre.
- Drinks with sugar content below 5g per 100ml will be exempt.
Also exempt are pure fruit juices and drinks with a milk content.
The manufacturers have done a great job in preparing for these potentially profound changes. Most have reformulated their products. Some like Coke have decided to keep the same formulation but reduced the pack sizes to maintain a sensible price point.
What is beyond doubt is that consumers are becoming very “sugar aware” and this is likely to have an effect on all sugar driven categories over time. The biggest growth drivers in the soft drinks category are now the no or low sugar based products. While this is now an inexorable trend I do believe that there is still a market for high sugar formulations such as Ginger Beer and that we will see a polarization in the market.
The challenge for retailers is to keep a close eye on the category and to be ready to make regular changes to range and display layouts as the market evolves. There again changing trends, ranges, layouts is business as usual for all retailers. I firmly believe that the suppliers have managed the transition well.
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