What's Happening?
The UK government is contemplating changes to its Soft Drinks Industry Levy (SDIL), which could extend the tax to more beverages by lowering the sugar threshold from 5g to 4g per 100ml. This move would also remove exemptions for milk-based drinks and their plant-based counterparts. The SDIL, introduced in 2018, has been successful in reducing sugar consumption and encouraging reformulation in the beverage industry. The proposed changes aim to further decrease sugar intake by targeting drinks that have been reformulated to just below the current threshold. The government is also considering a lactose allowance to account for natural sugars in dairy drinks.
Why It's Important?
The potential expansion of the sugar tax could significantly impact the beverage industry, particularly small businesses that may struggle to absorb the costs of reformulation or increased prices. The changes could undermine previous investments in reformulation and affect the profitability of many companies. Additionally, the removal of exemptions for milk-based drinks could have a substantial impact, as these drinks typically contain higher sugar levels. The proposed changes reflect the government's ongoing efforts to reduce sugar consumption and improve public health, but they also pose challenges for businesses in adapting to new regulations.
What's Next?
The government has closed its consultation on the proposed changes, and manufacturers are considering their options for responding. Companies may choose to introduce new zero-sugar variants, reformulate existing products to meet the new threshold, or increase prices on products affected by the legislation. The government is expected to announce its decision on the levy changes in the coming months, which will determine the future landscape of the beverage industry.
