The food and drink industry is facing a crisis in the form of crippling ‘health taxes’.
Soft drinks manufacturers have already been hit with the sugar tax. There’s an open consultation on a ‘milkshake tax’ and now campaigners are calling for a calorie tax. These are supposedly to help tackle important issues such as obesity, but will end up doing more harm than good.
The sugar tax has seen different soft drinks, depending on sugar content, hit with taxes ranging from 18p to 24p per 100ml. This has meant part of our range of premium soft drinks, mixers and tonics, Franklin & Sons, is liable to the tax and since its introduction in April last year it has cost us in excess of £425,000.
Our research showed consumers don’t want soft drinks full of artificial sweeteners and e-numbers that you need a science degree to understand. People want to have confidence in what they’re drinking and feel more comfortable with natural ingredients, including sugar. This is despite widespread awareness of the tax, and consumers being bombarded with anti-sugar messaging.
Because we understand consumers want natural ingredients and respect their ability to make purchasing decisions, it was never an option for us to switch to lab-engineered sugar substitutes. This would have risked sales. I also truly believe as the public read more and more media stories about the safety of artificial sweeteners, they’ll increasingly prefer to buy products made using natural sugar.
Campaigners would argue that higher prices of drinks with higher sugar content encourages people not to buy them and improves health. This is ridiculous for two important reasons. Firstly, we live in a society all about respecting freedom of choice. If supermarkets are priced out of providing consumers with different products because rsps are massively inflated by taxes, this restricts choice. Similarly, if consumers suddenly can’t afford something because the price changes overnight, it limits their ‘choice’ and alienates them. It won’t encourage positive behaviour.
Secondly, penalising companies for using natural sugar forces them towards synthetic substitutes. Is the government really helping to improve public health by encouraging use of such artificial sweeteners through taxing the use of natural sugar? Highly doubtful.
The real concern facing food and drink companies is that these ‘health taxes’ are increasingly becoming the go-to option and that they seemingly have no limits.
When the sugar tax was mooted, it was highlighted that milk-based drinks would be exempt due to their calcium content. The introduction of a milkshake tax would mean this is no longer true. The same could, worryingly, quite easily happen with a calorie tax. There are calls for this to be applied to foods, but what’s to stop it expanding to drinks? They contain calories, after all.
In the not-too-distant future, unless attitudes change, one single food or drink product could be liable to multiple levels of different ‘health taxes’. This isn’t sustainable for the industry or improving public health. Consumers don’t want to have choices dictated to them by being priced out of decisions, and rising operating costs will only threaten business survival, further limiting consumer choice and causing public resentment.