Two months before the first UK sugar levy becomes effective, the soft drinks industry is preparing to comply with the new legislation. As emerged from the webinar “The Soft Drinks Sugar Levy” hosted by the trade magazine The Grocer last week, indeed, manufacturers and retailers, have spent recent years adjusting production processes and the soft drinks formulation to meet the requirements of the new levy.

Being effective from the 6th of April, the levy will be applied to non-alcoholic beverages sold in the UK, including imports, containing added sugar and a total sugar content of more than 5g per 100ml. Beverages containing pure fruit juice and milk-based drinks (where milk content is over 75%) will be exempt. The tax also specifies that is manufacturers’ responsibility, and not retailers, to apply and pay the levy.

These two last points open up an interesting scenario about opportunities for sugar substitutes, and how the introduction of these alternatives in soft drink formulation will be received by final consumers. Cutting out sugar has clear consequences in terms of product’s flavour and, as such, the manufacturers’ choice of sugar substitute becomes crucial to ensure the same taste to the final drinkers.

During the webinar it was highlighted that while stevia has often emerged as the designated natural, low-calorie sugar substitute, its bitter aftertaste often compromises the product’s final flavour, making it less than ideal. Other natural sweeteners, such as apple juice, offer a potential solution because fruit juice is levy-free since the sugar content is classed as natural, “free,” sugar rather than added.

However, the inclusion of natural sweeteners in soft drinks will not necessarily find favour with UK consumers.

Image: “Which of the following claims is the most appealing when choosing food / drinks?”, 2017. Credit: GlobalData’s Q4 2017 global consumer survey.

GlobalData’s Q4 2017 consumer survey has unveiled that, in contrast to the global average, British consumers find food and drinks labelled as “naturally sweetened” less appealing (12%) than those products tagged as “no added sugar” (26%). The use of both claims can refer to healthier drinks and they can be labelled simultaneously on soft drink packaging, thus the finding highlights a potential gap in consumers’ knowledge about sugar substitutes and related claims.

With this in mind, the UK sugar levy delivers another challenge for manufacturers and retailers. Indeed, the soft drinks re-formulation should be combined with a clear communication to the final consumers. Including “naturally occurring sugar” options in the ingredient list does not compromise the health perception of the soft drinks but will sweeten the flavour, thus, it should be properly promoted to consumers.

Hence, producers could use further claims on packaging to guide consumers towards “naturally sweetened” items when shopping. For example, a label promoting the nutritional advantage of using fruit juice could incentivize the purchase of those soft drinks featuring naturally sweetening ingredients.