Milkshake manufacturers have reiterated calls for changes to the sugar tax to only apply to added sugars as rumours of a tax change have resurfaced.
Chancellor Rachel Reeves is expected to remove the tax-based exemption for milk-based beverages under the Soft Drinks Industry Levy as a part of the budget later this month.
The Treasury confirmed to The Grocer that the Chancellor would be announcing more details at the budget following the feedback it gathered as part of the consultation document released in the spring.
It is still unclear what these changes would be but the industry has called for the tax to only pertain to “added sugar” and not naturally occurring sugars, such as lactose.
“The government is overlooking the nutritional benefits that milk naturally provides,” said Shaken Udder CEO Rob Reames. “If the government has listened, the proposed sugar tax on milkshakes should go ahead with a lactose exemption, otherwise ministers risk pushing consumers towards less beneficial alternatives, undoing the health benefits that the levy aims to achieve.
“Our call to the government is to only place a levy on any added sugar elements of a dairy drink, to prevent demonising milk,” he added.
The government proposed the use of what it called the “average lactose content of semi-skimmed milk”, which it said was 4.8g lactose per 100ml of milk, as the “baseline for calculating the lactose allowance for a milk-based drink”.
Currently, soft drink manufacturers must charge at least 18p per litre on soft drinks containing more than 5g of sugar per 100ml.
Read more: Sugar crash: dairy drinks Dairymen 2025 category report
Reames warned milk’s inclusion in the SDIL could see brands reformulate their drinks to avoid being penalised, which he said would have an outsized impact on SMEs “who don’t have the same budgets as larger businesses”.
“Reformulation may also come at the expense of taste, change the product as people know it, and force producers to find less natural solutions to sugar,” he added. “For that reason, we won’t be reformulating our products with artificial sweeteners to navigate the sugar tax.”
In his foreword to the consultation on SDIL launched in April, James Murray, then exchequer secretary to the Treasury and Ashley Dalton, parliamentary under-secretary of state for public health and prevention, justified its extension on health grounds and a need to make it “more ambitious”.
“While there is no doubt about the nutritional benefits of plain milk, it remains an anomaly that sugary pre-packaged milkshakes and other milk-based drinks are exempt from the levy,” they said.
Arla said it was aware of the government’s ongoing discussions surrounding SDIL and would “review any changes once the policy has been finalised”.
No comments yet