Just a few short months from now, the UK will be facing a first-of-its-kind sugar tax. The tax, initially intended only to target fizzy drinks, is similar to taxes already existing in some European countries. From April, it will cost consumers extra to buy drinks with high levels of sugar in the hope that the higher price will dissuade them from making such purchases. Make no mistake; the sugar tax will impact sports nutrition products one way or another. It may eventually apply to some of them.
When former Chancellor George Osborne announced the sugar tax in his final budget, he touted it as a way to ensure better health for children. Osborne went so far as to say that the UK "cannot have a long-term plan for the country unless you have a long-term plan for children's healthcare."
New Chancellor Philip Hammond has indicated that the sugar tax will go forward as originally planned. The government hopes to raise some £520 million that will ostensibly be put toward sports funding for primary schools. This is all well and good, but how will this affect sports nutrition vending?
Greater Demand for Healthier Choices
There is evidence to suggest that the sugar tax will reduce the demand for fizzy drinks. For example, Mexico's 10% tax on sugary drinks led to a 12% drop in sales during its first year. Hungary attacked the problem from a different angle, taxing the manufacturers of sugary drinks instead. Within the first year of its tax, the country saw a 40% decrease in the amount of sugar manufacturers were using in their products.
It is quite possible that the UK sugar tax will have similar effects. If it does cause people to buy fewer fizzy drinks, those drinks will have to be replaced by something else. We see it as an opportunity for makers of sports drinks with considerably less sugar to grab a larger share of the market.
Extending the Tax
Also worth considering is whether the government will extend the tax to all sugary food items should there be a positive impact on fizzy drinks. If so, additional taxes could mean higher prices on everything from chocolate to bakery confections.
For those of us in the sport nutrition vending industry, market conditions influenced by a more broad sugar tax would open the door for a new range of healthier alternatives. It would probably mean a greater emphasis on sports nutrition products in all kinds of vending machines, not just those machines at leisure centres and gyms.
While we take no official position on the sugar tax, we do believe that it presents an opportunity for better nutrition in vending. As such, we will be keeping a close eye on what happens once the sugar tax is implemented in April 2018. In the meantime, we will continue marketing our sports nutrition vending machines and the products they offer to customers looking for healthier options.
Sources:
The Sun – https://www.thesun.co.uk/news/1619208/sugar-tax-affect-cost-uk/
