Sugar Tax Will Have A Profound Effect On The UK Soft Drinks Industry, says MD Of Red Star Beverages

With recent research by Mintel suggesting the upcoming sugar tax in 2018 will have an adverse effect on volume sales, Clark McIlroy, Managing Director At Red Star Beverages, has given his view on the possible impact on the industry.

He said: “With the inexorable decline of high sugar carbs or sodas’, the growth of water, the continued growth of stimulant energy drinks and the still emerging but rapidly growing sectors of: functional water, iced coffee, and low-calorie, low-sugar flavoured juice drinks – it is no surprise that the upcoming sugar tax will have a profound effect on the UK soft drinks industry. Recent research really does reinforce this: 37% of consumers asked about the tax by Mintel, said they’d switch to low/no-sugar versions of soft drinks, while 20% of consumers said they would stop drinking sugary soft drinks altogether when the tax is introduced in 2018.

“This change is down to savvier consumers, who are unwilling to drink their calories and are as informed about the back of the pack as they are about the branding on the front. These modern consumers very often have pre-programmed reference points to inform their choice, such as: calorie count, sugar content, and even the nature of the artificial sweeteners and preservatives. This means low-sugar and sugar-free variants of drinks are set to benefit from the sugar tax and this ’smart age’ attitude to products is the way forward for the industry as a whole.

“The soft drinks sector covers a broad spectrum from the purity of water at one end, to the sugary carbonates at the other. Increasingly consumers have gravitated towards the former, not because they have suddenly fallen in love with water, but often because they’re running away from something else, such has the health risks of a high sugar diet.

“Yet taste remains paramount and for a long time there has been an unmet need in the market for great-tasting drinks that combine the hydration benefits of water with fantastic flavour, without the ‘dis-benefits’ of sugar and calories. That’s why we believe brands like Sparkling Ice and Vithit have been winners, as they have tapped into that ‘holy grail’ concept which other diet or zero drinks haven’t quite captured.

“I believe the soft drinks market is adapting to this ‘smart age’ ethos and will continue adapting to meet demands of consumers. Many brands that were the preferred choice for previous generations will not be acceptable to the next, with research such as Mintel’s highlighting the decline of high carb and sugar drinks. At Red Star we believe it’s a very exciting time to be in the soft drinks market as the level of innovation over the next few years will be unprecedented. We’re excited to be at the forefront of embracing and indeed helping to drive that change, with the new brands we are introducing to the market. The first innovators have already arrived and are delivering unprecedented rates of sale… there are even more waiting in the wings, so watch this space!”

NAM Implications:
  • Where at: A good summary for anyone in doubt – or denial – re where the sugar-tax is headed.
  • Where headed: Opportunities for those suppliers that have already anticipated the inevitable.
  • Effect on you: The search for lower-sugar alternatives will cause savvy consumers to re-assess front and back of favourite brands.
  • Action: Time to anticipate this new/renewed interest in contents and conduct a contents-based relative appeal assessment of your brand vs. available alternatives, and work at giving ‘your’ consumers what they want…