Hundreds of soft drinks products, including many household names, will escape the government’s extension of the sugar tax, after ministers bowed to pressure from the drinks industry to water down its proposals.
Health secretary Wes Streeting announced yesterday that the government was pressing ahead with plans to broaden the net of the Soft Drinks Industry Levy (SDIL), following a consultation launched in April.
However, under the compromise proposals, plans to toughen the threshold of the tax to include drinks with 4g or more of sugar per 100ml have been amended to 4.5g.
Analysis carried out by The Grocer shows the huge impact of the changes. Nutritional information from 1,855 soft drink SKUs across Asda, Morrisons, Tesco, Sainsbury’s and Waitrose revealing 365 SKUs contained between 4g and 4.5g of sugar per 100ml, meaning they will escape the ban.
Winners include Fanta, Lucozade, Pepsi, some Irn-Bru and most Rubicon sparkling SKUs.
In contrast, just 27 SKUs contained between 4.6g and 5g per 100ml, with the biggest lines to be hit by the tax including Fanta Pineapple & Grapefruit (previously Lilt), Dr Pepper (4.9g/100ml), and Schweppes Ginger Beer (4.9g/100ml).
Drinks companies have also been given extra time to reduce sugar in their drinks, with the moves now to come into force in January 2028, as opposed to April 2027 as initially mooted. They had argued that the original plans were a “kick in the teeth” to the soft drinks industry given its leading role in developing the UK’s deposit return scheme, due to launch in October that year.
The Treasury is understood to have sent an email to soft drinks companies on Monday to tell them it had decided to push ahead with an extension of the tax in the budget, but industry leaders told The Grocer the details of the plans represented “the least worst outcome for the industry” as it braces for what else lies in store in today’s announcements.
As well as claiming that reducing sugar in soft drinks beyond 4.5g/100ml would have increased the risk of “flavour rejection” from consumers, sources said the compromise would wipe many millions off the expected reformulation costs.
The change to 4.5g is also hugely significant because it corresponds with the level at which products are classified as HFSS under the existing nutrient profiling model, which has become a major factor in securing listings with supermarkets.
Reduction consequences
However, even reductions to that level have still proved to have dramatic consequences.
Lucozade Energy Orange had one of the biggest, with a reformulation from 13g to 4.5g. A year later, sales had slumped by more than £25m.
“While this move will create an additional cost burden for industry, including our SME members, we take comfort from the fact that a government which describes itself as pro-growth has elected not to pursue its original goal of lowering the threshold to 4g per 100ml, which would have been technically challenging for industry,” said British Soft Drinks Association director general Gavin Partington.
“We are also reassured that the government has committed to making no further changes to the levy this parliamentary term, as well as deciding against an implementation date of 2027, which would have been damaging for our sector at a time when we are helping to set up a world-leading deposit return scheme to go live in 2027.
“We welcome the government’s proactive engagement with industry on this issue. As well as protecting jobs and investment in our industry, the move to 4.5g acknowledges the widespread reformulation work undertaken by soft drinks manufacturers over the last decade.
“Since 2015, sugar consumption from soft drinks is down 43%, and today just 6% of take-home sugar in diets in Great Britain comes from soft drinks.”
Soft drinks bosses had warned the government that its original proposals would cause huge damage to many SMEs and family-owned businesses.
They pointed out soft drinks were not among the top 10 categories for contributing to take-home calories and instead called on ministers to extend the tax to other categories.
The BSDA said that from 2015 to 2024 its members had removed almost three quarters of a billion kg of sugar from their products.
Elise Seibold, chief operating officer of Lucozade owner, Suntory Beverage & Food GB&I, said: “We’re pleased that the government has recognised the significant contribution our sector makes to the economy and work to reduce sugar in our drinks.
“This allows us to continue to drive growth with further investment in our manufacturing capabilities in the south west and zero sugar innovation, while also working alongside industry to deliver a world-class deposit return scheme.
“We will continue to work with the government on holistic, evidence-based solutions to support the nation’s health.”
An FDF spokeswoman added: “We’re pleased the government has listened to industry and decided to make the changes to the Soft Drinks Industry Levy.
“Drinks manufacturers will continue conversations with government to ensure we have the right conditions to keep investing in healthier product innovation in the UK, even while the rate of food Inflation continues to run so high.”
Belvoir Farm MD Pev Manners said: “I’m pleased that the government has listened to the industry.
“We reformulated down to 4.5g because of the HFSS rule, that is absolutely critical to us. It’s great that the government has agreed on a compromise.”
Health campaign groups react
Health campaign groups welcomed the government’s extension of the tax, which also saw ministers press ahead with plans to extend the tax to milkshakes and milk-based coffee products. However, some expressed disappointment at the changes to the thresholds.
“This update rightly prioritises children’s health over corporate profit,” said Barbara Crowther, children’s food campaign manager at Sustain.
“The Soft Drinks Industry Levy has brilliantly succeeded in getting companies to reduce sugar and treating sugary milkshakes the same as fizzy drinks is the right thing to do.
“Companies who’ve already reduced sugar will now be rewarded for acting responsibly, whilst those still stacking excess sugar into milkshakes will now have a clear choice: change their recipe or pay for the health harm caused.
Dr Kawther Hashem, head of research and impact at Action on Salt & Sugar, added: “Lowering the threshold from 5g to 4.5g per 100ml is a positive step, and expanding the levy to include milk-based drinks is particularly important.
“However, we had hoped the government would go further. The consultation explored reducing the minimum sugar threshold to 4g, so it’s unclear why this has now risen to 4.5g. “Our own submission showed a median sugar content of 4.2g/100ml in soft drinks.
“We found nearly three-quarters of drinks already fall below 4g/100ml, so today’s decision misses an opportunity to drive further meaningful reformulation. We also called on the government to create a new upper tier for drinks exceeding 10g of sugar per 100ml, targeting the major brands that have refused to reduce sugar in their high sugar drinks. This would have prevented companies that choose not to reformulate from gaining an unfair advantage over those actively investing in sugar reduction.”
Campaigners are now pushing the government to extend the tax to other HFSS and ultra-processed products.
“We know sugar comes from a range of food, not just soft drinks, so the government should now be looking to learn from the success of SDIL to date and extend it to food, as part of efforts to grow a strong economy that supports public health, and reset the economic incentives in the food system,” said Dr Hannah Brinsden, head of policy and advocacy at the Food Foundation.
“This will also help create new revenue that can be invested in addressing key priorities such as child poverty and children’s health.”
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