The UK’s Soft Drinks Industry Levy (SDIL), which was introduced in 2018, has been largely credited as a successful driver for encouraging reformulation and lowering the sugar content of beverages.
Encouraged by its impact, the UK government is now looking at extending the reach of the tax.
Instead of kicking in at 5g sugar per 100ml, it could be changed to cover beverages starting at 4g per 100ml. Milk-based drinks (which currently enjoy an exception) may also be included.
But this comes at a time when business is particularly tough for small companies.
Soda tax is ‘wrecking ball’
In fact, British businesses Fentimans, Belvoir Farm and Folkingtons warn the plan to extend the UK’s sugar tax will push many small, domestic producers ‘over the edge’
In a joint piece published in UK newspaper The Telegraph, Ian Bray (chief executive Fentimans), Pev Manners (managing director, Belvoir Farm Drinks) and Paul Benit (managing director, Folkington’s) said shoppers would also lose out: being forced to choose between inferior products and higher prices.
The introduction of the sugar tax in 2018 proved that many brands were able to reformulate and create successful beverages with less sugar.
The result, however, was that many brands now fit in this 4g-5g zone: with manufacturers naturally focusing on bringing their drinks’ sugar content in at just below the 5g threshold.
Furthermore, the lower the sugar content is reduced, the harder reformulation becomes to maintain the same taste, flavor, mouthfeel and experience.
“On paper, the Treasury’s proposed lowering of the SDIL threshold from 5g to 4g per 100ml looks like it would require only a small adjustment,” write the SME leaders in The Telegraph.
“On the ground, however, for small and medium-sized enterprises such as ours, making premium soft drinks in glass bottles and aluminium cans, the impact would be more akin to being hit with a wrecking ball.”
British SME’s
Fentimans is a British company known for its botanically-brewed soft drinks and mixers. It was founded in 1905: today it is owned by Thomas Fentiman’s great grandson Eldon Robson.
Owned and run by the Manners family, Belvoir Farm has been making cordials since 1984, since joined by a wider range of beverages.
Folkington’s was founded in 2012 by Paul Bendit: who decided to carve out his own brand of fruit juice and soft drinks after 12 years developing premium soft drinks for leaders in the catering sector and stand-alone brands.
What’s added insult to injury is that businesses have already gone through reformulation before (many in the run up to the introduction of the tax in 2018).
The trio point out that they will have to go through ‘the whole rigmarole again’ of reformulating, investing and compromising.
“For those who may be thinking, ‘well you’ve reformulated once, you can do it again’ – unfortunately things are not that black and white. If it were easy, we’d have done it!
“But it’s not. Reformulating a drink – properly – takes time and money. And, right now, every penny counts. Ingredient costs are up, National Insurance is up, Packaging Recovery Notes charges have tripled, Extended Producer Responsibility fees are landing us with fresh bills running into hundreds of thousands of pounds, even for SMEs, and industry is being told to stump up millions more for a Deposit Return Scheme.
“There’s only so far you can stretch a business before it breaks.”
Gavin Partington, director general of the British Soft Drinks Association (BSDA), told us that SMEs are crucial to the British soft drinks industry.
“Research shows that for the small and medium-sized businesses that make up the UK soft drinks industry: often family-run, rooted in communities, supplying high streets and export markets alike,” he said. “The financial hit of the proposed change to the SDIL would be severe.
“Further reducing the sugar threshold in soft drinks would not only risk undermining years of reformulation investment with questionable positive health outcomes, but also the vitality of many SMEs in our sector, who are already wrestling with soaring input costs, among other things.
“Leave the levy as it is.”
