Soft drinks brands take up the sugar tax gauntlet with focus on innovation

Helen Pomphrey, head of marketing at Cawston Press, believes the sugar levy has truly benefited the sector. “There hasn’t been a lot of real, genuine innovation in soft drinks. Products like coffee, beer and crisps all have premium products, but soft drinks never really had that,” she explains.

Cawston Press has reformulated the recipe in many of its drinks in a move Pomphrey says has made its products more like craft soft drinks and actually improved the taste. The company chose to get rid of added sugar and up the amount of fruit juice, rather than adding artificial sweeteners to try to reduce the sugar content.

The levy has also caused some of the biggest brands in the sector to look to innovation and new products.

Coca-Cola is releasing three new soft drinks this year: ice tea brand Fuzetea, ready-to-drink cold coffee Honest Coffee, and dairy-alternative smoothies brand AdeZ. Coca-Cola has also looked to improved classics, with 2017 seeing the company unveil a new Fanta — rolling out new packaging and slashing the sugar content in a bid to combat the levy.

“When we launched new Coca-Cola Zero Sugar in 2016, we also launched our biggest ever marketing campaign for a zero-sugar variant. It was well received by our fans and in its first year, Coca-Cola Zero Sugar became the fastest-growing cola on the market,” says Joel Morris, director of corporate affairs at Coca-Cola.

Gavin Partington, director general of the British Soft Drinks Association, agrees that the levy has led to soft drinks companies looking again at their recipes. “It has sped up the shift towards low- and no-calorie products within the sector and you can also see that most of the businesses that are coming into the sector, like small startups, are developing low- and no-calorie products.”

“The soft drinks levy persuaded some companies to move further, faster, but across the breadth of the sector, most companies had already substantially started to shift their portfolio towards low- and no-calorie products long before the soft drinks industry levy was announced,” adds Partington. The impact on soft drink sales

However, Coca-Cola Classic will be taxed as the company chose not to change the recipe – as did rival Pepsi. Instead, it is reducing pack sizes, which will in effect keep the price the same but mean consumers get less Coke for their money. Morris says the solution “to keep sharing packs of Coca-Cola Classic as affordable as possible is to make them smaller – for example, the 1.75 litre bottle will be replaced by a 1.5 litre bottle as a direct result of the new tax”.

However, according to figures from Mintel, a price hike will put consumers off. Nearly half (40%) of consumers say they would cut back on the amount they drink in response to a price rise, while 16% say they would stop drinking them altogether.

Significantly, half of 16- to 24-year-olds, the biggest consumers of soft drinks, would cut back on the amount of standard carbonated soft drinks they drink if the price were to rise under the sugar tax. A third would not change their drinking habits at all.

Pomphrey thinks that rather than shunning soft drinks consumers will “reappraise their choices”. She explains: “People have been buying habitually for a very long time and once the sugar levy comes into place people will make more informed decisions, and that’s not to say they’ll completely reject drinks with sugar but what we will see now is a variety of drinks.” What is next for the war on sugar?