Published By : 17 Mar 2016 | Published By : QYRESEARCH
The sugar tax introduced in the 2016 budget in the U.K. is expected to not affect the global drinks giants. While the sugar tax would raise the price of these diet drinks, the major soft drinks manufacturers would absorb the costs by increasing the costs of other products such as low-sugar drinks and bottled water. According to the industry experts, the tax would not achieve its purpose in its current form. The tax is designed in such a complicated way that most of the sugary drinks might not be levied at all. As a result, due to high prices of aerated soft drinks, consumers would switch to milkshakes or fruit juices which are exempted from the new sugar tax. Thus, the tax will not be able to prevent the high sugar intake of consumers.
Why Sugar Tax in Its Present Form will not Reduce High Consumption of Sugary Drinks among Consumers?
George Osborne’s sugar tax has surprised his own party MPs as well with some of them even opposing the tax. Soft drink manufacturers have reacted angrily to the news of sugar tax. Coca Cola has stated that the new tax will not change the habits of the consumers and has claimed that levying the tax would not be a right way to tackle obesity among children.
Economic experts in the U.K. have pointed out that teas, coffees, and milkshakes that contain a high amount of sugar are being exempted from the sugar tax as they contain milk. Pure fruit juices will also not fall under the purview of the tax. Following the announcement of the sugar tax, the share prices of key players in the sugary drinks market such as Coca Cola’s British arm, Britvic, and A.G. Barr have dipped up to 27p per share. The new levy on sugary drinks will be used to fund more sports activities across primary schools.