October 31, 2020

New report highlights potential economic dangers of soft drinks tax

hand holding soda can pouring in metaphor of sugar contentNew data by global forecasting experts, Oxford Economics, shows the soft drinks tax proposed by the Government in this year’s budget will only lead to a reduction of five calories per day – the equivalent to just one bite of an apple – but will risk over 4,000 jobs across the UK.

The report finds that impact of the tax will be felt across the wider economy, particularly in the hospitality sector and amongst smaller retailers. Lower sales will reduce the industry’s contribution to the economy by £132m.

Gavin Partington, BSDA Director General, said: “Post-Brexit, securing investment and jobs is more important than ever. This research shows the soft drinks tax is not only ineffective in fighting obesity but will come at a significant price for the economy, costing thousands of jobs.

“As an industry we recognise that obesity must be tackled which is why we have invested heavily in reformulating drinks. Since 2012 this has led to a 16 per cent reduction in sugar intake from soft drinks. The tax is therefore unnecessary and harmful to our economy.”

Nick Stewart, Senior Economist at Oxford Economics, said of the figures: “Early indications are that the soft drinks tax will lead to over 4,000 job losses across the UK. The impact will be felt across the wider economy, predominantly in hospitality and smaller retailers. These are significant losses considering we estimate the tax will only lead to a reduction of just five calories per person, per day.”

According to BSDA’s recently published 2016 annual report ‘Leading the Way, every soft drink category has contributed to reducing sugar intake, most notably carbonates (17 per cent) and dilutables (35 per cent).  Sales of bottled water continue to rise (eight per cent in 2015) and smaller pack sizes have increased by over a quarter (26.5 per cent) since 2011.

In 2015 the soft drinks sector became the only food and drink category with an ambitious plan to reduce calorie intake from its products by 20 per cent by 2020.

The industry has also committed not to advertise regular soft drinks to children under 16, across all media channels, including online.

Gavin Partington added: “The international evidence has shown that there is no evidence worldwide that food taxes have an impact on levels of obesity. By contrast Industry efforts to help consumers cut sugar intake are working, with calories from soft drinks now down 16 per cent since 2012 through smaller portion sizes and reformulated drinks.”

The full Oxford Economics report is available here which highlights the regional breakdown, showing London and the South East bearing the brunt of job losses with smaller retailers and convenience stores losing 500 jobs.