Extending Sugar Tax To Baked Goods Could Create “Challenges”

sugarExtending the sugar tax to include cakes, biscuits and sweets would be a far greater challenge for manufacturers than soft drinks, Mintel has suggested.

In its consumer trends report, the company suggests that if the tax on sugary soft drinks is perceived to be successful it will be applied to other categories such as baked goods and calorific coffees, but because sugar is fundamental to not just taste, but texture and bulk, manufacturers would have a major challenge reformulating recipes.

Richard Cope, Senior Trend Consultant, said:

“Ahead of the UK’s April 2018 sugar tax, international soft drinks brands are already scrambling to reformulate and innovate. Mintel research reveals that sugar’s bad press is already impacting on behaviour across Europe, with more than six in ten Polish (63%) and Spanish (63%) consumers telling us that they are actively reducing their consumption of, or are actively avoiding, sugary foods. This is followed by 60% of Italian consumers, 55% of French and 54% of German consumers. Rather than contest the legislation, carbonated soft drinks will continue to downsize can and bottle sizes and reformulate with non-sugar alternatives. 100% fruit or milk based drinks will not be impacted, so can be expected to compete more strongly by not having to hike up their prices, regardless of their sugar content. However, there is the possibility that some of the afflicted carbonated soft drink brands might start aggressively comparing their reformulated, reduced sugar options with the levels of intrinsic sugar in the untreated milk and fruit juice products of those rivals that are exempt from the tax.”

“Other brands are faced with stark choices of taking a hit on more expensive sugary drinks, developing more artificially sweetened lines or testing the public taste buds with drinks that are simply less sweet in taste. It’s also going to prove difficult for brands to play the “natural” card when pushing alternatives, because plant-based sweetening ingredients like stevia leaves have to be processed. When it comes to “natural” it’s more likely that brands will look to profit from the simplicity of their bottled water lines.”

“It remains to be seen what consumers will respond most strongly to: price hikes or general bad press around sugar. Mintel’s research reveals that around half (53%) of UK carbonated soft drink users claim they would either cut back on or stop drinking sugary carbonated soft drinks if the price were to increase by 24p a litre as a result of the sugar tax. Growing awareness of the cost of obesity to society threatens a tipping point where consumers eschew personal freedoms in favour of a sin tax, where sugar becomes ‘the new tobacco’. The fear for brands is the latter scenario and if this tax is perceived to be successful in that regard, similar legislation will be applied to other categories – baked goods and highly calorific coffees for example – and other countries, whether or not they are part of any trade union. The potential challenge for manufacturers of cakes, biscuits, sweets and ice cream would be far greater, because sugar is fundamental not just to taste but also to providing texture and bulk.” Richard continues.