Coca-Cola boss exclusive: We’re tackling the sugar question but tax isn’t the answer

JON WOODS
25 MAY 2016
Telegraph UK
The Government’s plan to impose a tax on soft drinks containing sugar made headlines after it was announced in the Budget in March.
People are curious about what Coca-Cola thinks of the proposal; I get asked about it a lot – at work and also at home with friends and family.
While we agree with the Government that obesity rates are too high and need to be reduced, we do not believe additional taxes are the solution. There is no reliable evidence from anywhere in the world that shows taxing food and drink – let alone just some soft drinks – has changed people’s behaviour and made them thinner.
‘A sugar tax will impact thousands of businesses for whom soft drinks are a vital part of their trade’
We are a consumer-led business. We listen to and respond to our consumers, and for several years they have been telling us they want a greater choice of lower and no sugar drinks. We have responded to this by reformulating many of our drinks to reduce their sugar content, introducing smaller packs and increasing the marketing investment in our no sugar options.
Sugar tax: what does it mean, which drinks will be affected, and will it work?
We know that these changes are having a positive impact.
We see from our own sales figures, but also in the Government’s data, that people are switching from regular (full sugar) drinks to no sugar alternatives. Figures from Defra’s Family Food Survey show that between 2004 and 2014, purchases of regular soft drinks declined by 44pc, with the same volume made up by increases in no sugar drinks and water.
Coca Cola Zero Sugar
This summer the company will launch new, improved Coca-Cola Zero Sugar, which it bills as its biggest new product launch in a decade.
Even more recent data from Kantar shows that the sugar from soft drinks bought in shops for consumption at home has fallen by 14pc between 2012 and 2016. The combined actions of soft drinks manufacturers and consumer education and awareness is powerful and proving effective.
While progress is clearly being made, we also understand that more is required.
But we want to see action based on evidence of what works. Taxes did not make the top 10 most effective interventions to reduce obesity in the McKinsey Global Institute’s obesity report, which came out in November 2014; top of the list were reformulation and smaller portions.
Our reformulations of popular drinks like Fanta, Sprite, Dr Pepper, Lilt and Oasis have removed thousands of tonnes of sugar from the British diet. Since 2005, we have launched 27 new or reformulated drinks with lower or no sugar and today every drink we sell has a lower or no sugar alternative. All of our new product development work is focused on creating great tasting lower and no sugar drinks. We want more people to be aware of this, which is why we are talking about it in the adverts we are currently running in several newspapers.
All of this activity requires significant investment. Since 2012, we have invested almost £30m in research and development to create new lower and no sugar drinks. We have made this investment because we know that to succeed and grow our business here in the UK we need to provide consumers with the drinks they want.
As well as being ineffective, the sugar tax will not just impact the manufacturers of soft drinks, but also the thousands of businesses – the sugar farmers, suppliers, pubs, restaurants and newsagents – for whom soft drinks are a vital part of their trade.
It will also hit consumers in the pocket regardless of what they drink. The Office of Budget Responsibility (OBR) has reported that it will cost more than £1bn in its first year due to an increase in interest payments on inflation-linked Government loans.
That’s almost twice the amount the Treasury claims it will raise and a bill the taxpayer will presumably have to pay – and it does not factor in the increase in the cost of a weekly shop. Finally, the regressive nature of the tax means those least able to afford it will be hit the hardest.
Taxes did not make the top 10 most effective interventions to reduce obesity.
Over the coming months we will continue our work – the work that we know actually helps people to reduce the sugar they consume from our drinks.
This summer we will launch new, improved Coca-Cola Zero Sugar. It’s our biggest new product launch in a decade.
We have very deliberately made it look more like Coke and taste more like Coke, but without sugar, as we seek to encourage more people – including those who love Coca-Cola Classic – to choose a no sugar drink. This is a core part of the growth plan we have for our business here in the UK in the years ahead.
We believe our actions will prove more effective in helping people reduce their sugar intake than a tax. We will continue to listen and respond to our consumers and through our marketing encourage more people to choose one of our many no sugar options.
Jon Woods is the general manager of Coca-Cola UK & Ireland