The Budget bombshell sugar tax may force fizzy drink manufacturers to make changes

 
Stephan Shakespeare
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Calls To Cut High Levels Of Sugar In Fizzy Drinks
Some fizzy drink makers are planning to reduce the sugar content of their products (Source: Getty)

For all the headlines about the Budget in the past couple of weeks, there was one policy announcement that could have a major impact on brands – the sugar tax.

Campaigners such as Jamie Oliver celebrated the move, hailing it as an important step in the fight against child obesity. Soft drinks company bosses are naturally less in favour and believe they have not been consulted adequately.

YouGov has assessed public attitudes to the issue. We found that over half (56 per cent) agree with the tax, while almost three in 10 (29 per cent) disagree.

There is also support for the government’s intervention on the issue. Only 30 per cent agree with the assertion that “it is not the government’s responsibility to take measures to limit obesity” (against 48 per cent who disagreed).

However, there is a degree of scepticism that the tax will not have the desired effect.

More than a third (36 per cent) believe that the proposed price increases are not high enough to have any impact.

As well as the public policy issue, there is a business aspect – how the tax will impact upon fizzy drinks brands.

Irn Bru maker AG Barr has announced that it is planning substantially to reduce the sugar content of its drinks. It believes that brand loyalty and strength as well as “product reformulation” will minimise the financial effect on its brands.

Perhaps the change of policy is no surprise given that YouGov BrandIndex data indicates how consumer perception of Irn Bru has shifted since the Budget.

Its Buzz Score (whether a respondent has heard something positive or negative about a brand in the past two weeks) has declined by seven points. Meanwhile, its Impression Score (whether a respondent has a favour­able impression of the brand) has dropped by seven points.

Whether the tax does indeed change buying habits remains to be seen. The preference of consumers (by 62 per cent against 15 per cent) is for manufacturers to change ingredients to meet the new standard, rather than raise prices.

We would expect drinks brands would much prefer to keep their customers content, not their sugar content.

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