Sugar Tax Era Is the Time for Innovation

Sugar Tax Era Is the Time for Innovation

Starting with the 6th of April, manufacturers, retailers and consumers will enter a new era as The Soft Drinks Industry Levy, known as the ‘sugar tax’, will come into full force. However, Red Star Brands, which offers full service support to disruptive and unique food and drink brands, believes that this is the perfect opportunity for retailers to be creative and up to date with the modern consumers.

Although the sugar tax may seem scary, it’s actually a great opportunity for the sector to address traditional approaches and revolutionise how we market, create and promote soft drinks, explained Clark McIlroy, managing director of Red Star Brands.

In the wake of the tax, many traditional soft drinks manufacturers have reformulated, but the real industry challenge is renovation versus innovation. We have been monitoring the market and have seen that soft drinks with a focus on ‘better for you’ are outselling traditional categories such as Cola, Carbonates and RTD Juice Drinks. Consumers are voting with their feet and retailers need to use their chiller space wisely, he continued.

According to the new proposed tax bracket, some soft drinks will still contain up to 24g of sugar in one 500ml serving and face no levy; therefore it is essential that retailers embrace innovation and health.

To success in a post sugar tax market, Clark suggests the ‘EASY’ approach: Embrace the change; Allocate more space for ‘better for you’ brands; Signpost the category; and Yield. Data shows that at the end of January 2018, 1.31 billion units of Water were sold against a declining 1.26 billion units of Cola. Consumers’ consumption has changed and the sector needs to keep up with this demand. Retailers need to either increase shelf space for the low and no-sugar brands or take something away. In addition, signposting the ‘better for you’ brands will make it clear for consumers where they sit in the chiller. The growth of this category, including Water and Water+ isn’t going anywhere, so retailers need to adapt to keep ahead of the curve.

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