Summary
Daily per capita sugar consumption in soft drinks in the UK has declined by 30% between 2015 and 2018, in part in response to the Soft Drinks Industry Levy. This decline could see similar such measures introduced for other high sugar content food products. Some 73% of the decline was driven by industry reformulation efforts and 27% by changing consumer purchasing patterns. An important underlying driving force however is the trend towards healthier eating, which is largely immune to short term price falls (as induced by the economic effects of the Covid-19 pandemic). This will accelerate the trends towards reduced Eu sugar consumption which is already underway. If ACP sugar exporters remain focussed on the EU market, they will need to target increasingly differentiated member states sugar markets, since considerable price premiums exist on in certain national EU sugar markets (region 3 countries).
A study from the Nuffield Department of Population Health at the University of Oxford ‘has found the total amount of sugar sold in soft drinks in the UK dropped by 29% between 2015-2018.’ (1). The study found ‘between 2015 and 2018, the volume of sugars sold per capita per day from soft drinks declined by 30%, equivalent to a reduction of 4.6g per capita per day’ (2). This has occurred despite a 7% increase in the volume of soft drinks sold. The soft drinks industry has faced considerable pressure to reduce sugar in soft drinks on public health ground, including through the introduction of the Soft Drinks Industry levy. The study found ‘that individual soft drink companies in the UK are making a sizeable contribution to sugar reduction, with eight out of the top ten companies reducing the sugar content of their products by 15% or more’ (1).
While ‘Coca-Cola and Britvic, had reduced the total quantity of sugars they sold in drinks by 17% and 26% respectively’ product reformulation efforts had not extended to flagship brands such as Coca-Cola and Pepsi (1). What is clear however is that reformulation is leading the way in reducing the amount of sugar consumed through soft drinks. Reformulation accounted for 73% of the reduction in sugar consumed, while changes in in consumer purchasing patterns accounting for 27% of the reduction (1).
The study suggests these changes are likely to be the result of ‘a combination of government action, mostly through the SDIL, changes in marketing practices on the part of the soft drinks industry, and greater awareness of the harms caused by sugary drinks amongst consumers’. It is suggested that improvements in public health can be driven by working with businesses on product reformulation, particularly if this is incentivised through fiscal measures (1).
This view was supported by other studies including one dealing with the impact of government measures in Chile. These measures included bold front of package health warnings, advertising restrictions on unhealthy foods and a differentiated fiscal policy, which increased taxes on high sugar content products (from 13% to 18%) while reducing taxes on lower sugar content products (from 13% to 10%). This 8% tax difference has significantly impacted sugar consumption, leading to a ’21.6% decrease in the monthly purchased volume of the highest taxed sugary soft drinks’. Professor Cuadrado from the University of Chile maintained the study showed ‘the tax incentive may not need to be huge to have impact’ (3).
While concerns have been expressed that the recent, Covid-19 related decline in sugar prices (-18% from 24th February to 23 March (4)) could hold back reformulation efforts aimed at reducing sugar consumption via soft drinks, this is not held to be likely by specialists in sugar reduction efforts. Reformulation of products to reduced sugar usage is largely attributed to the wider trend towards healthier eating, rather than short term price considerations. This reformulation process is however, being assisted by the lowering of the price of alternative sweeteners, such as aspartame and Acek, both of which are now out of patent. These products enjoy a huge price advantage over sugar, which ‘no real world fall in sugar prices’ could hope to impact on (5).
A limited impact of the Covid-19 linked sugar price reduction on reformulation efforts is particularly likely since the global sugar balance is now showing the largest deficit in 11 years, with the deficit having been revised upward to 9.435 million tonnes (4). This suggests global sugar prices could recover once the effects of the Covid-19 pandemic begin to recede and oil prices and consumer demand recovers
| Comment and Analysis The success of public policy interventions, particularly the use of sugar levies suggests that on public health grounds this approach is likely to be further extended to other high sugar content food products. This is likely to accelerate the decline in overall EU sugar consumption which is already underway (see companion epamonitoring.net article ‘EU Sugar Sector Restructuring Seeing Stabilisation of EU Production Import and Export Trends Which Pose Challenges for Some ACP Sugar Exporters’, 3 February 2020).Increasingly ACP sugar exporters who are serving the EU market will need to be more sophisticated in the EU market components they serve. Figures posted on the EU Sugar Market Observatory on 26th March 2020 showed sugar prices in region 3 countries (Bulgaria, Spain, Greece, Croatia, Italy, Portugal and Romania) some 28% higher than in region 2 countries (Belgium, Germany, France, UK and Holland), where the most competitive EU beet sugar producers are located. This is reflected in the patterns of overall imports into the EU, with Spain now being the leading sugar importing country (+30% in the first months of the 2019/20 season compared to the same period in the 2018/19 season) and Italy being in third place (+14% in 2019/20 compared to the same period. In the first months of the 2019/20 marketing year EPA/EBA suppliers accounted for 56% of total EU sugar imports, with South Africa accounting for a further 6%. However, Brazil has remerged as a significant supplier to the EU market in the first months of the 2019/20 marketing year (10%). This reflects the growing price differential between EU and world market prices and the enhanced price competitiveness of Brazilian sugar following a 13% decline in the value of the Brazilian Real in the month to 23rd March 2020. Against this background ACP sugar exporters will need to increasingly capitalise on the price across EU national sugar markets in the face of increased competition from Brazil. This will require better targeting of sugar exports to those individual EU member states where significant price premiums can be enjoyed (region 3 countries); these are different market to those traditionally served by ACP raw cane sugar exporters. |
Source:
(1) University of Oxford, ‘Amount of sugar sold in soft drinks drops by 29% in the UK’, 13 January 2020
https://www.ndph.ox.ac.uk/news/amount-of-sugar-sold-in-soft-drinks-drops-by-29-in-the-uk
(2) Beveragedaily.com, ‘Soft drink sugar drops by 29% in the UK’, 13 January 2020
https://www.beveragedaily.com/Article/2020/01/13/Soft-drink-sugar-drops-by-29-in-the-UK#
(3) Beveragedaily.com, , ‘Sugar taxes work even among poor… just: study’, 14 February 2020
https://www.beveragedaily.com/Article/2020/02/14/Sugar-taxes-work-even-among-poor-just-study
(4) EC, ‘Sugar Market situation AGRI G 4 – Committee for the Common Organisation of Agricultural Markets’, 26 March 2020
https://ec.europa.eu/info/sites/info/files/food-farming-fisheries/farming/documents/sugar-market-situation_en.pdf
(5) foodnavigator.com, ‘Could falling prices hinder sugar reformulation?’ 18 March 2020
https://www.foodnavigator.com/Article/2020/03/18/Could-falling-prices-hinder-sugar-reformulation
(6) BMC Medicine, ‘Reductions in sugar sales from soft drinks in the UK from 2015 to 2018’ 13 January 2020
https://bmcmedicine.biomedcentral.com/articles/10.1186/s12916-019-1477-4