Soft drink brands suffer blow as government pledges sugar tax for 2018

Chancellor George Osborne has confirmed a sugar levy will be introduced on all soft drinks by the end of 2018.

In his Budget 2016 briefing, Osborne told the House of Commons that the imposed sugar tax on soft drinks would raise £520m, which will be used to help support school sport and fitness programmes.

“You cannot have a long-term plan for the country unless you have a long-term plan for our children’s health care,” said Osborne as he confirmed the sugar tax.

“Doing the right thing for the next generation is what this government and this budget is all about. No matter how difficult and how controversial it is.”

Prime Minister David Cameron had previously rejected the sugar tax proposal despite high-profile support from the likes of celebrity chef Jamie Oliver and evidence that Mexico’s 10% tax cut reduced sugary drink consumption by 6%.

Although the UK soft drink industry has made steps to reduce the sugar content of its products – with high-profile launches such as Coca-Cola Life and Britvic’s aim to reduce the amount of calories in its products by 20% by 2020 – the news of a sugar levy will have come as a surprise and will mean brands will now have to do even more.

Speaking to Marketing Week last November, Ian Twinn, director of public affairs at advertisers’ trade body ISBA, claimed: “A sugar tax isn’t the answer. The hike in price would have to be huge to change people’s behaviour and politicians won’t do that.”

However, the levy will be imposed on the soft drinks industry, rather than on consumers. Soft drinks will be taxed according to their volume in two bands, while the two-year window is to give major players such as Britvic and Coca-Cola time to adapt products to reduce their sugar content.

Public Health England (PHE), meanwhile, has repeatedly called on the advertising industry to introduce tighter marketing regulations around sugary products such as fizzy drinks – something, the likes of the Advertising Association, had previously rejected.

Other highlights from Osborne’s Budget 2016 included the announcement of additional spending cuts totalling £3.5bn by 2020 – lower than the £4bn expected. He also said fuel duty would be frozen for the sixth year running along with the levy on beer, cider and Scottish whisky.

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