The British government is contemplating the expansion of the existing sugar tax to include milkshakes and other dairy-based beverages, marking a significant shift in their policy regarding sugary drinks. As announced recently by Chancellor Rachel Reeves, this proposal aims to combat escalating obesity rates by encouraging manufacturers to reconsider the sugar content in their products. The current exemption for milk-based drinks will be reviewed in a consultation process that commenced this week.
The initiative to widen the sugar tax, known formally as the Soft Drinks Industry Levy (SDIL), has been in place since April 2018, initially targeting sweetened fizzy drinks. The levy was implemented by the Conservative government with the objective of reducing sugar consumption among the public, thereby promoting healthier dietary choices. As part of the proposed changes, the maximum sugar threshold that would exempt drinks from incurring the tax is set to decrease from 5 grams to 4 grams per 100 milliliters. This altered threshold stands to impact approximately 203 pre-packaged milk-based drinks that currently make up 93% of sales within this beverage category.
This move to bring milkshakes and dairy alternatives under the sugar tax umbrella stems from growing concerns about public health, particularly regarding the intake of excess sugar among the youth. The Treasury highlighted that young individuals derive only 3.5% of their calcium intake from milk-based drinks. This statistic raises doubts about whether the health benefits associated with dairy consumption can outweigh the negative effects of high sugar content. By enforcing the sugar tax on these drinks, the government is striving to create a financial incentive for manufacturers to reformulate their recipes, thereby further lowering sugar levels.
Since the sugar tax’s inception, there has been a noticeable trend among manufacturers redesigning their products to fall just below the current 5-gram limit, resulting in an estimated 89% of soft drinks sold not being subject to the tax. The Treasury has indicated that this reformulation has effectively established a “target” for product sugar levels, which may have unintended consequences on product formulation and consumer choices.
The consultation period for the proposed changes will last until July 21, providing an opportunity for various stakeholders, including the food and drink industry, to voice their opinions. This week’s proposals also indicate the Treasury is neutral towards findings from the consultation, functioning as a platform for discussion rather than as a predetermined route to new legislation.
The SDIL has generated an impressive £1.9 billion since its introduction, with around £338 million reported as revenue for the 2023-24 financial year. As this figure illustrates, the levy has increasingly become a significant financial mechanism for the government in addressing health concerns linked to sugary drink consumption.
However, there remains considerable opposition to the levy, notably from the soft drinks sector and various retail sectors such as pubs and off-licence shops. Critics argue that the financial impact of the levy is disproportionately felt by lower-income families and that it falls short of effectively addressing the core issue of obesity within society. The industry representative body, the Food and Drink Federation, has expressed a desire to contribute insights during the consultation process, asserting that there have already been substantial developments in reducing sugar levels across soft drinks – a 46% reduction over five years and 30% in pre-packaged milk-based drinks within three years. They emphasize the need for the government to support innovation and establish clear long-term goals to bolster industry confidence.
In summary, the government’s potential move to extend the sugar tax to milkshakes and similar products signifies a robust approach to public health and nutrition reforms. It reflects a broader commitment to improving dietary standards while addressing the complex issue of obesity that continues to affect many communities in the UK.