How has the sugar tax affected the soft drinks market?

The insight shows that the majority of soft drinks producers have reformulated recipes to ensure they are exempt from the levy, while consumers are being driven to healthier alternatives as a result. 

The soft drinks levy came into force​ this April, making soft drinks with a total sugar content above 5g per 100ml 18p more expensive per litre, and those with above 8g of sugar per 100ml now costs 24p more per litre.

Reformulation paying dividends 

Nichols has reformulated more than 60 products to ensure its portfolio was sugar levy ready, while 100% of the company’s soft drinks, including Vimto, Levi Roots, Sunkist, Feel Good Drinks and its frozen drinks brands such as ICEE and Starslush, are exempt from the levy.

“As a business, we take our role in positively influencing shopper behaviour very seriously, and the actions we were already taking to reduce sugar in our ranges is paying dividends now,” said Ed Jones, senior customer marketing manager for Nichols.

“We’ve removed 2,000 tonnes of sugar from our products over the past six years and many have been under the levy for some time. For example, Vimto Original squash has been under sugar levy levels since 2002.”

The reformulation process has positively impacted Nichols’ soft drinks value sales, with the Vimto brand up by 5.4% and Feel Good Drinks up by 45% (both outperforming the overall category, which increased by 2.4%). This growth is expected to continue as the tax drives more consumers to look for healthier options.

Taste matters

Jones added: “The category has not just been impacted by the soft drinks levy – consumers are generally paying more attention to what is and isn’t in their food and drinks. But what’s also important to us is taste and, luckily, we’ve had really positive feedback on the reformulated products, which is a massive success for us.”

Shane Swan of Tayto Park, a member of the British Association of Leisure Parks, Piers and Attractions, echoes this sentiment from a service perspective: “We have noticed customers increasingly requesting low sugar and no added sugar drinks, but they also want the great tasting products they know and love.”

For pubs unsure what to stock as a result of the levy, Nichols has the following advice:

• Stock a wide range of drinks – have both low and zero-sugar drinks, together with original formats so people have choice
• Include drinks that cater for multiple trends eg, healthy and premium
• Use PoS to drive shoppers to low sugar and natural options
• Don’t forget taste is most important – while health is a key trend, taste remains at the forefront of the category