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Apr 12, 2017

It’s a matter of taste

by Mary Anne FitzGerald - Client Services Director

It’s a matter of taste

In the budget last month, Chancellor Philip Hammond issued a surprising update on the Soft Drinks Industry Levy saying he was delighted that the revenue it would generate will be less than forecast. It was originally estimated that £520m would be raised but he said that because a number of producers are already in the process of reformulating the sugar content of drinks, there has been a reduction in the expected yield.

The British Soft Drinks Association however was not surprised. Soft drink sugar content is now 22.3% lower than in 2012. The BSDA has also claimed that soft drinks represent the only UK sector with a calorie reduction target for 2020.

From April 2018, drinks with more than five grams of added sugar per 100ml will be levied by 18p per litre, while those with eight grams or more per 100ml will have an extra tax of 24p per litre. In other words, 6p or 8p on a standard can of fizzy pop.

Pure fruit juices are off the hook as they do not carry added sugar. Ditto milk based drinks because of their calcium content. Diet and no sugar versions are also not included.

So which brands are setting out on the road to reformulation?

SHS drinks is relaunching its Shloer portfolio next month. Current recipes contain between 9.7g and 11.4g of added sugar so axing this and sweetening all eight variants with extra fruit juice instead will make the range exempt from the levy and the calorie count will be slightly reduced. The quality of the liquid will also be enhanced and this, according to SHS, is the main focus of the reformulation rationale. A triple win.

Sticking with an adult theme, Zeo is also refreshing its range targeting “increasingly health-conscious millennials who are shunning alcohol in favour of natural, healthy drinks.” The brand wants to “Offer a positive choice for consumers looking for a healthier, natural and no added sugar alternative to conventional soft drinks,” said John Mulvey, Zeo Head of Marketing.

Lucozade Ribena Suntory, announced in November 2016 that it would be stripping half of the sugar from its drinks. But loyal consumers have been up in arms this week about the ‘nasty’ new Lucozade.

A spokesperson from LRS said: “We’re sorry to hear that some consumers have tasted a change in Lucozade.” 

"We think our drinks development team has done a brilliant job to remove 50% of the sugar while keeping the great taste, but we will be sure to pass this feedback on to them.”

Let’s hope the rollout of the revised recipes for Ribena and Orangina later this year will fare better. And indeed that AG Barr doesn’t incur too much Scottish wrath when it reduces the added sugar in Irn Bru to 5%.

The potential health benefits are naturally welcome for obvious reasons but reformulation should not be undertaken lightly.  There is the potential for damage to be done to brands that have to dramatically decrease their sugar content. “If you get your taste or your mouth feel wrong, your sales will collapse,” says the BDSA’s press officer Gareth Barrett. “Consumers are very fickle, they’re very angry when you change a product and they don’t like it.”

Coca-Cola is sticking to its 10.7% guns on Classic red but conversely is canning the short lived and misunderstood Coke Life.  People never really got it. Half of drinkers didn’t realise Life contained 33% less sugar than Classic, or that Coke Zero contained none.

The real issue that Coke Life has is that it wasn’t appealing enough to the health conscious consumer, who was much more likely to opt for one of the zero sugar varieties, or a different drink entirely. Which indeed they did. According to Nielsen, Coke Life sales fell by 73% over the last year accounting for less than 1% of total Coke product sales. Meanwhile, Coke Zero, now known as Coke Zero Sugar, has seen sales soar by 25.6% to £115.1m.

However, in Australia Coke Life lives on with a new positioning, recipe and name: “Coca-Cola with Stevia”. Watch this space…

Of course brands must adapt their products and marketing to respond to a more health conscious consumer. But they must be careful not to cannibalise their existing products, or opt for variants that are “a little bit healthy”, perhaps sacrificing taste or appeal as a result. Even the most well intentioned may want to be naughty from time to time.

Will the sugar tax work? Mexico, which has one of the world's worst weight problems with a third of adults obese, introduced a 10 per cent sugar tax on sugar-sweetened drinks in 2014 which resulted in a 12% fall in sales in the first year. In Hungary, the introduction of a tax on companies has led to a 40 per cent reduction in levels of sugar products. In France, however, the government caused outrage in 2012 when it introduced a sugar tax of just 1 cent per drink can. Nul points!

Strangely, Brexit itself will have a mixed effect as it will lead to both the price of sugar coming down and the costs of importing sweeteners rising. And if the current US backlash against artificial substitutes in favour of a real sugar movement crosses the pond too, there could be even more interesting times ahead.

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