Will the Sugar Tax actually work?

The Sugar Tax is opportunistic, expensive and unlikely to achieve its stated goals, says Jon Woods, general manager of Coca-Cola Great Britain & Ireland 

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Clearly, one of the issues we face as a society is obesity, and specifically  childhood obesity. It’s an issue  that occupies the minds of everybody in  the food and drink industry, and as a  manufacturer we want to help people  make good choices about what they eat  and drink.

 We launched Diet Coke almost 30  years ago, before people were talking  about obesity, when people talked about  calories and Jane Fonda workouts. And  really, we launched Diet Coke back then  because we read consumer sentiment:  people increasingly wanted a low- calorie option. Diet Coke went from  a tiny part of the business in the UK  to almost half of the cola we sell today,  along with the other no-sugar Coca- Cola we make, Coca-Cola Zero Sugar.  Most soft drinks manufacturers have  been reducing sugar in their drinks, and  that’s reflected by the market: between  2004 and 2014 sales of full-sugar soft  drinks fell by 44 per cent. And yet, in  the same period, obesity rates increased  by about four per cent. So it’s pretty  hard to argue that soft drinks are the  sole cause and need special attention. 

Further research, from the analysts at  Kantar, says firstly that soft drinks  contribute less than three per cent of the  total calories in the UK diet, and secondly  that the sugar coming from soft drinks  purchases has fallen by 16 per cent since  2012. The decline in full-sugar soft drinks  over the past 10 years has been massive,  a double-digit decline in four years – but  total sugar consumption has fallen  much more slowly, and in the last few  years it’s been broadly flat.  

Why is this happening? I can’t speak  for the rest of the industry, but I can say  why sugar from soft drinks is declining.  We’re in a competitive business, and we  win by offering consumers the drinks  that they want: better tasting, lower- sugar variants. Consumers are  increasingly aware of their diets, and  zero-sugar alternatives are widely  available and competitively priced.  

It doesn’t seem logical to create a tax  that focuses on only some of the sugar  we consume. It’s targeted specifically at  soft drinks (and even then not all soft  drinks, with milkshakes and coffee- drinks being exempt) – the one category  which has reduced sugar significantly.  Why target the one success story that  has already cut sugar by 44 per cent?  

Sugar taxes have been tried in other  countries, without much success. The soft drinks tax in Mexico gets talked  about most often. On average, it reduced  Mexicans’ daily calorie intake by just six  calories per day. In the UK, Oxford  Economics has predicted that the levy  will reduce calories by on average five  calories per person per day. Five calories  is a bite of an apple. Coca-Cola has been in the UK for  more than 100 years. The work we do  across our 11 sites, including our six  manufacturing plants, from East  Kilbride in Scotland to Sidcup in Kent,  delivers £1bn in revenue to the  Exchequer, mainly through VAT and  corporation tax. With our bottler  partner, we employ 4,000 people in the  UK, and for every one of our employees,  we create eight further jobs through our supply chain. We invest about £50m a year in our operations here and spend  around £800m a year with 8,500 UK  suppliers, from farmers to packaging  suppliers. All of this is made less  affordable by the tax. Ultimately the sugar tax is a hugely  expensive and damaging policy. As  someone involved in running a very  large business I’m not interested in  symbolic gestures, but in trying to make  a real difference in the real world. To me  this is reformulating and launching new  lower or no sugar drinks - as we’ve done  with 28 drinks since 2005, and using  our marketing to attract people to  lower-calorie alternatives. These are  difficult, expensive measures, they take  large numbers of people working  around the UK to implement and they  create real results: the sugar tax will  only make this investment harder. 

For more on the Sugar Tax, search #canthetax.