soft drinks sugar

Soft drinks giant Britvic is best positioned to cope with chancellor George Osborne’s sugar levy, exclusive research for The Grocer can this week reveal.

Although the average price per litre of its flagship Pepsi brand would shoot up by 15.5%, just more than the average for rival Coca-Cola (15.4%), the study, by Brand View, shows Britvic would escape taxation on 63.5% of its range, compared with 49.7% for Coca-Cola.

The research shows 54% of carbonates and energy drinks will be caught in the chancellor’s net, with no less than 42% of soft drinks products across Asda, Morrisons, Ocado, Sainsbury’s, Tesco and Waitrose set to be stung with the 24p per litre higher band.

In contrast, just 12% of products currently fall into the proposed lower tier of 18p/litre bracket, for products with more than 5g of sugar.

Assuming manufacturers pass on the price increases, the Brand View data suggests the levy would hike the average base price of soft drinks by 6% across the carbonates & energy drinks category.

Although Osborne set out to tackle childhood obesity, among those worst affected by the policy are soft drinks aimed at adults. Of manufacturers with 20 or more listings across the six supermarkets, Fentimans (makers of drinks including Dandelion and Burdock) and Shloer owner Merrydown would be worst hit, with more than 75% of Fentimans’ products attracting the higher tax, for products with 8g of sugar or more and 67% of Merrydown’s.

Brand View also found Lucozade and Monster would be much harder hit than rival Red Bull.

“The analysis shows the levy will have a major impact across the carbonates and energy drinks market, with more than half of listings falling into one of the bands,” warned Brand View ­analyst Chris Elliott.

Britvic predicted the levy would see a continued push by suppliers towards lower sugar, with a new report it commissioned showing there had already been a huge surge towards healthier products in the past year. The report, using figures from Nielsen, shows sales of low-calorie products were £1.5bn, an increase of 2.3%, in the year to 9 January, in stark comparison to the 2% fall, to £4bn, of their standard counterparts.

“Following the announcement of the sugar tax, 2016 and beyond will see continued focus on addressing consumer health concerns and offering viable alternatives to full-sugar equivalents,” said Phil Sanders, GB commercial director at home.

However, there is anger among companies that even brands leading the charge towards reformulation will be taxed, including Coca-Cola Life, which Brand View finds will see the average price per litre rise 12% if CCE passes it on to consumers. CCE MD Leendert den Hollander told The Grocer it had not yet decided if it would pass on the tax.

Sugar levy - what percentage of the major soft drink makers’ portfolios will be affected?

Coca-Cola: 50.3%

coca cola life

Coke looks set to be hit harder than rival Britvic and among products in the firing line is lower-calorie brand Life, which will go up in price by 12% if it passes on the tax.

Fentimans: 75.6%

fentimans

Despite the levy being aimed at childhood obesity, many adult soft drinks will be caught in the net, with more than three-quarters of Fentimans’ products falling foul of the chancellor.

Britvic: 36.5%

pepsi

Flagship brand Pepsi would see a bigger price hike than rival Coke, says the research. However, Britvic is much less exposed to the tax, with nearly two-thirds of its range escaping taxation.

Merrydown: 67.6%

shloer

The Shloer maker will also see nearly 70% of its products affected, but its family favourite Shloer Light could duck under the government’s radar with relatively minor reformulation.