Sugar tax: the non-alcoholic beverage industry responds

The non-alcoholic beverage industry has responded to calls for a proposed sugar tax on beverages. The proposal, if approved, will see a tax of 40 cents per 100 grams of sugar, increasing the price of individual beverage cans by about 16 cents. This is predicted to reduce sugar consumption from soft drinks by 12–18% and raise annual government revenue of up to $814 million.

The sugar tax is strongly advocated for and supported by the Australian Medical Association (AMA). According to AMA research, sugar-sweetened beverages contain 33–50 g of sugar in an average 375 mL can of soft drink. This category of beverage includes carbonated and non-carbonated fruit, dairy/milk, sport, energy and cordial drinks containing free sugars.

The AMA estimates that Australians consume over 2.4 billion litres of sugar-sweetened beverages annually — the equivalent of 960 Olympic sized pools. Research found that 36% of adults and 41% of children consumer sugar-sweetened beverages at least weekly, with 9% and 7% respectively consuming them daily.

A range of health problems have been linked with the frequent consumption of sugary drinks, such as poor dental health and obesity, which is a risk factor for chronic illnesses such as type 2 diabetes, heart disease, stroke and cancer. These conditions, which may be preventable, have a significant impact on Australia’s healthcare system and broader economy.

To address this, the AMA has called for a tax on a subset of these beverages — all non-alcoholic drinks containing free sugars, excluding 100% fruit juice, milk-based and cordial drinks. The focus is drinks that provide limited nutritional benefit.

The Australian Beverages Council (ABCL), representing the non-alcoholic drinks industry, has responded to this call in opposition of the proposed tax. Geoff Parker, CEO of ABCL, spoke out on behalf of the industry.

He said that in 2018, the nation’s largest non-alcoholic drinks companies committed to Australia’s first Sugar Reduction Pledge, which aims to reduce sugar across the companies’ portfolios by 25% from 2015–2025. By the end of 2021, pledgees had cut sugar content by more than 16%.

The ABCL argued that demand for low- and no-sugar varieties has increased over a 20-year consumer trend for more options in grocery and convenience stores. A range of initiatives were created in response to this, including reformulation, smaller pack sizes, and investing in a greater variety of low- and no-sugar products to meet growing consumer demand.

In 2022, the Sugar Reduction Pledge report found that low-sugar options accounted for half of all sales, up from 47% on the previous year. Additionally, Australians now drink almost five times more bottled water than they did two decades ago and full-sugar soft drink consumption accounts for less than 15% of free sugar intake.

Parker said that change in consumer behaviour is more lasting when individuals are able to make informed choices through healthier drink options.

“All the evidence demonstrates that each year people are already drinking less sugar-sweetened beverages. This is happening without a sugar tax which risks increasing the cost of the weekly shop and placing more pressure on households grappling with the soaring cost of living,” he said.

The ABCL further argued that the United Kingdom and other countries who have imposed a beverage tax found no change in obesity levels, with it only making a difference of three calories per person per day in the UK. A University of Cambridge-led study found that consumers will seek out cheaper, non-taxed beverages, and a tax would make no difference in the amount of weekly household purchases of sugar sweetened beverages. The study also found that the sugar content in taxed drinks is reduced by 10%, a figure already exceeded by ABCL’s Sugar Reduction Pledge.

“In 2023 we need innovative, real-world evidence-based solutions to address lifestyle health challenges rather than slapping another tax on the weekly shop of Australians. The drinks industry urges other categories in the shopping trolley to make their own commitments and play their part in helping people choose healthier options,” Parker said.

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