Tackling sugar taxes should be ‘E.A.S.Y.’, claims UK distributor

A UK-based beverage distributor has said that tackling sugar taxes is ‘easy’ – or at least it could be, if brands follow their advice on surviving a growing amount of legislation around products such as sugar-sweetened soft drinks.

Red Star Brands, which deals with labels including Bai and Sparkling Ice, has identified four points that when put together spell out ‘easy’.

It said the pointers offer beverage manufacturers a way to succeed in a post-sugar tax environment.

The first is ’embrace’ the change: data captured at the end of January showed 1.31 billion units of water sold in the UK against a declining 1.26 billion units of cola, adding an additional £61 million to the soft drinks category in the preceding 52 weeks. Water-plus is driving 44% of this growth, commanding higher price points, outperforming standard water and increasing its share of the market.

The data mirrors similar statistics from the US, where bottled water has overtaken fizzy drinks as the country’s most popular bottled beverage.

Red Star Brands argued that, as consumers’ consumption was changing, the sector needed to keep up with this demand.

The second point is to ‘allocate’ more space for better-for-you brands: Red Star said that retailers should open their shelves to low- and no-sugar brands and make ‘brave decisions’ about what stock they have on their shelves.

Next comes the importance of ‘signposting’ the category: better-for-you brands must be presented to consumers in one clear block on shelf, Red Star said, so that it is easier for shoppers to find healthier choices.

Many people are looking for a functional better-for-you option but are unsure of where it sits in the chiller. This is where retailers can help.

Of course, the company has a vested interest: it brought the antioxidant-infused beverage brand Bai to the UK last year, following its acquisition by Dr Pepper Snapple.

Last month, it warned that the UK’s soft drinks industry was undergoing a “seismic shift the likes of which it has never experienced before”.

Red Star’s final recommendation is to ‘yield’: retailers that are brave and take risks will be able to enjoy profitable growth from creating more room in their chillers for better-for-you drinks, it claimed. The growth of this category – including water and water-plus products – isn’t going anywhere, so retailers need to adapt to keep ahead of the curve, Red Star said.

Managing director Clark McIlroy said: “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. The sugar tax is not a ‘catch all’ answer to better health, nor is it a way to educate consumers – however, it has pushed the industry to begin embracing products that challenge the status quo and show that sugar does not equal flavour.

“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’ [positions] 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.”