Made in Scotland from (slightly less sugary) girders
Earlier this year, AG Barr took the brave step of reducing the sugar content of its most iconic drink. Irn Bru drinkers across Scotland breathed a collective sigh of relief when only the supertasters among them were able to spot the difference. This relief was no doubt shared at AG Barr when already strong sales continued, with a predicted 7.5% sales increase across its drinks portfolio for 2017-2018.
This move by AG Barr (mirrored by similar steps taken by other manufacturers) was a preemptive response to the Soft Drinks Industry Levy (SDIL) which came in to force last Friday [on Friday 6 April 2018].
With the introduction of the SDIL the UK joined the very small number of sugar-obsessed nations whose anti-obesity policy features a tax on sugary drinks. Manufacturers of qualifying drinks now face an additional tax on any high-sugar drinks they sell.
The SDIL is a direct attempt to change manufacturer and consumer behaviours while raising additional revenue for investment in school sports, breakfast clubs and other healthy initiatives.
What is affected?
The SDIL will affect the manufacturers of drinks which:
- have had sugar, or anything that contains sugar, added during production (other than the addition of fruit juice, vegetable juice and milk);
- contain at least 5g of sugar per 100 ml in its ready to drink or diluted form;
- are ready to drink (or to be drunk must be diluted);
- are bottled, canned or otherwise packaged; and
- have an ABV of 1.2% or less.
For those producing drinks that meet all of the above conditions, the SDIL will see drinks with more than 8g of sugar per 100ml subject to a tax rate of 24p per litre. For drinks containing 5-8g of sugar per 100ml, the rate will be 18p per litre.
The design of the SDIL is such that should manufacturers amend their recipes sufficiently, they will not be affected by the new levy.
What is exempt?
A number of drinks are exempt, including milk, fruit juices that contain no other added sugars, infant formula and cocktails. The full list can be found here.
Will it/Is it working?
The initial signs are encouraging. Many manufacturers have changed or are changing their recipes in response to the SDIL. Projected revenue figures from the SDIL are down significantly since the levy was first proposed in 2016. This is an early indicator of positive changes in manufacturer and consumer behaviour. The extent of the impact of the SDIL will not be known for some time.