Marketing

Sugar tax would hit lower income groups

The introduction of a sugar tax would hit lower-income groups harder but would not guarantee a reduction in sugar consumption as this group is likely to trade down to lower-price goods.

So states GlobalData in a new report The Implications of Introducing a Sugar Tax in the UK and Beyond.

On the other hand, the tax would raise awareness among consumers bringing the high sugar content of soft drinks into the spotlight. This could stimulate new innovations in product reformulation, positioning and packaging sizes.

There is no clear evidence supporting sugar tax as a mechanism to influence consumer diets, states the report, but despite obesity/overweight and sugar-related health issues being two of the most concerning health issues for British consumers, consumption of sugar is high and climbing.

The GlobalData report argues that, “Price rises will not necessarily stall the taxed category’s sales as the demand is inelastic and consumers may just shift to cheaper brands”.

However it also states, “The tax would play a key role in promoting a healthy diet, bringing the high sugar content of soft drinks into the spotlight and stimulating demand for low-sugar and sugar-free soft drinks”.

It points out that taxing sugar would shift consumption away from sugary drinks (taxed or untaxed) and it could unlock new potential in low sugar, zero sugar or alternative sweeteners.

The report explores the likely effects of sugar taxes on consumer prices and behaviour. It outlines consumer responses to price hikes by attempting to evaluate to what extent sugar taxes could halt obesity by discouraging sugar consumption in the UK which will be the next country to adopt such a policy.

If they’re not already doing so, soft drinks manufacturers should be considering the introduction of low sugar and low calorie versions which are perceived to be healthier and they should experiment with natural sweeteners instead of sugar such as rare sugar or Stevia.

Manufacturers should also adopt a transparent approach through clean labels that promote positive messages associated with the reduction in sugar intake.

“Alternatively” suggests the report, “brands could keep the packaging similar to existing full sugar products with the premise that it is the same ‘great tasting’ product with a lower sugar content.”

 

 

 

 

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