Coca-Cola and other soft drinks manufacturers are reportedly poised to take legal action over the government’s plans to introduce a new tax on drinks containing high levels of sugar.

According to The Sunday Times, leading brands will sue the government over the tax, claiming it is "discriminatory" because it will not hit other liquids with a similar sugar content such as fruit juices and milkshakes. 

A senior industry source quoted by the newspaper said: “It’s fair to say we are more than just considering legal action. This has been rushed through without warning.” 

The government’s plan, due to come into effect in two years, will see soft drinks companies pay a levy on drinks with added sugar from April 2018, which is likely to be passed onto consumers. Whilst health campaigners have applauded the move designed to tackle rising levels of childhood obesity, industry representatives have said it will do little to combat the problem and will penalise firms that are already making significant progress in reducing sugar in their products. 

Coca-Cola’s UK Vice President & General Manager, Leendert den Hollander, said last week: “We don’t believe the sugar tax is the right thing to be done. We are not debating the issue, we are debating the solution. The facts don’t suggest that a sugar tax works to change behaviour. 

“We know this is one of the mechanics and solutions that people think will help deal with the issue of obesity, at least from a government perspective, but there is no evidence to suggest that this will reduce obesity.” 

Meanwhile, Gavin Partington, Director General at the British Soft Drinks Association said: “We are extremely disappointed by the Government’s decision to hit the only category in the food and drink sector which has consistently reduced sugar intake in recent years - down 13.6% since 2012. 

“We are the only category with an ambitious plan for the years ahead – in 2015 we agreed a calorie reduction goal of 20% by 2020. By contrast sugar and calorie intake from all other major take home food categories is increasing – which makes the targeting of soft drinks simply absurd.” 

Further insight: UK sugary drink tax could be sweet for food ingredient suppliers – see the Reuters website 

NAM Implications:

• Whilst the introduction of this sugar tax was badly managed by the government and will probably result in litigation to compensate for damage caused to businesses affected, it is best for stakeholders to see this as the beginning of an inevitable process...
• In other words, it is probable that food ingredients sugar, fat and salt will eventually be taxed under a ‘health’ umbrella
• In time, the government will begin to trade off tax income from ingredients taxation against the cost of hospitalisation arising from long-term obesity (Health Economics)
• In the meantime, this will drive ingredient reduction, the search for acceptable substitutes and research into ‘cause & effect’
• ...yielding a mix of opportunities and threats that need to be factored into trade strategies...