Britvic ‘well placed’ to deal with UK sugar tax

Britvic will engage in the government consultation on the sugar tax this summer. Pic: iStock

Britvic says its growing portfolio of ‘better for you’ soft drinks means it is well positioned to deal with the UK’s sugar tax, which is due to come into effect in 2018.

The soft drinks company said two thirds of its volumes will fall below the proposed tax bands.

Its comments follow that of A.G. Barr, which in its full year results in March reported a combination of brand strength and ongoing product reformulation would minimize the impact of the levy on its business.

Evolving consumer preferences

The UK’s tax on sugar-sweetened beverages was announced during the government’s 2016 Budget.

The levy will have two bands: one for total sugar content above 5g per 100 ml; and a second band for drinks with more than 8g per 100 ml.

Simon Litherland, chief executive officer, Britvic, said the company has been working to reduce calories in its portfolio for a number of years, and two thirds of its volumes will not be subject to the levy.

“While we are disappointed with the decision [to implement a levy] and believe a holistic approach is necessary to tackle obesity, Britvic is well placed to respond as we have been building our portfolio of ‘Better for You’ soft drinks for some time,” he said.

“As currently proposed, 66% of our volumes fall below the proposed tax bands.

“Since 2012, our actions, such as the removal of full sugar Fruit Shoot and Robinsons and the reformulation of brands such as J2O and Drench, have led to an annualized 19 billion calorie reduction across our portfolio.

Other reactions to sugar tax: A.G. Barr

Like Britvic, UK soft drinks company A.G. Barr expects two-thirds of its portfolio will be levy-free when the sugar tax is introduced in 2018.

It has reduced the average calorific content of its company-owned portfolio by 8.8% in four years, and anticipates the scale of change to accelerate over the next year as it reduces its exposure to high sugar products. 

“We will continue to play this leadership role and our focus will be on creating a portfolio of brands which appeals to evolving consumer preferences.”

Britvic says it has taken significant steps in recent years to reduce added sugar and reformulate drinks – for example, using stevia – and remains committed to a 20% calorie reduction by 2020.

It adds it will fully engage in the government consultation process on the sugar tax this summer.

No-sugar Pepsi Max success

Britvic today reported its interim results for the 28 weeks ending April 10, 2016. H1 revenue increased 5.1% to £678m ($994m) and 4.3% based on actual exchange rates (AER). Profit after tax increased 7.5% to £41.7m ($61m).

Litherland said the business continues to invest in long-term drivers of growth: supply chain efficiency in Great Britain, innovation, and its international business.

In 2015 it acquired Brazilian soft drinks company Ebba, and its Fruit Shoot multi-pack is being launched in the US.

In Great Britain, the company saw revenue growth of 2.4% in its carbonates in H1, led by Pepsi.

“The focus on the no-sugar Pepsi Max variant continued to be very successful with the new cherry variant a key factor in the growth,” said Britvic.

Meanwhile, the GB stills portfolio had a ‘disappointing’ first half of the year, with revenue falling 7.9%.

“Our recent innovations, including Teisseire and J2O Spritz are generating category growth and the second half of the year will see the introduction of new packs for Robinsons and the re-launch of Drench, an adult juice drink, with a new brand identity and lower sugar formulation,” the company said.

“As consumer trends move to “Better for You” products, our broad stills portfolio combined with our innovation program is well positioned to capitalize on the future growth opportunities.”

Britvic is the largest supplier of branded still soft drinks in Great Britain and the number two supplier of branded carbonated soft drinks. It combines its own brand portfolio (including Robinsons, Tango, J2O, Fruit Shoot, Teisseire & MiWadi) with PepsiCo brands such as Pepsi, 7UP and Mountain Dew Energy (which Britvic produces and sells in GB and Ireland under exclusive PepsiCo agreements).

Britvic also has operations in Ireland, France and Brazil. 

Related News

How can manufacturers make use of R&D tax reliefs to offset the investment costs and challenges? (© iStock.com)

Sugar tax reformulation: Could your company claim an R&D tax credit?

South Africa announced its sugar tax in February: now it is setting out the details. Pic:iStock/verdateo

South Africa sets out sugar tax plans

Brexit is likely to mean increased input costs, says manufacturer A.G. Barr. Pic:iStock/miluxian

A.G. Barr anticipates Brexit impact in 2017

UK sugar tax consultation launched

UK sugar tax: Government unveils plans and consultation

The sugar tax is to come into effect in April 2018. Pic:iStock/piotr_malczyk

UK sugar tax: Government encourages further reformulation as draft legislation published

© iStock

‘Health benefits of UK’s sugar tax will depend on industry’: Lancet study

© iStock/m imagephotography

South African sugar tax could be blueprint for all Africa: WHO

What actions could the industry take following the announcement of a UK sugar tax? Pic: iStock/lisaaMC

UK sugar tax: Will soft drinks companies sue the government?

A.G. Barr says that two-thirds of its portfolio will escape a sugar tax. Pic: iStock

A.G. Barr shrugs off sugar tax worries

Will the tax encourage companies to reformulate? Pic: iStock

UK sugar tax: The big questions

The UK's sugar tax will apply to beverages but not other food groups. Pic:iStock/OcusFocus

‘The way to tackle obesity is…’ ICBA president on alternatives to sugar tax

The announcement of a levy has come as a surprise to many. Pic: iStock

UK sugar tax on soft drinks: The industry's reaction

Submit a comment

Your comment has been saved

Post a comment

Please note that any information that you supply is protected by our Privacy and Cookie Policy. Access to all documents and request for further information are available to all users at no costs, In order to provide you with this free service, William Reed Business Media SAS does share your information with companies that have content on this site. When you access a document or request further information from this site, your information maybe shared with the owners of that document or information.