Sugar tax adds £5m in soft drink retail sales, study claims
The tax bands were implemented in response to rising number of overweight children in the UK.
Weeks after the introduction of the sugar levy, market research firm IRI indicates that sales of soft drinks rose by by £5 million - raising weekly profits to £167 million.
While supermarket prices of soft drinks rose, consumers shifted to low sugar alternatives and water. Due to this, IRI claims that an additional 7% or 11m litres of lower sugar soft drinks are now being consumed every week.
The sugar levy is composed of two tax bands: 18 pence per litre (5g of sugar per 100ml) and 24 pence per litre (8g of sugar per 100ml). It was implemented due to the government’s goal of raising an additional £500m to fund sports equipment and breakfast clubs for children in order to response to reports of rising numbers of children now overweight when they start school.
IRI says that following the passing on of costs to the consumer, Pepsi and Coca-Cola are the only brands to experience a small impact in volume (down 2% and -1% respectively), whilst other brands have seen positive impact in sales. In terms of value, however, Coca-Cola remains the "standout winner", with profits up by £2 million a week when comparing the pre and post trends.
“The introduction of the UK sugar levy has had a clear impact on the soft drinks category without effecting volume sales, so far. Good weather always leads to a rise in soft drinks sales but there is no doubt that higher prices have driven consumers to make healthier choices with one of every 13 soft drinks sold a low sugar alternative. We look forward to seeing how the big brands can capitalise on Britain’s changing habits and harness this growth successfully,” IRI Insight Director Stephen Jacobs said.
