Tobacco first – what’s next?

Jeff Rogut
As regulators mull new ways of hitting hip pockets for no proven outcomes we must be vigilant as an industry and ensure that the message of providing healthier options for our customers is heard and acted upon.
Another four planned excise increases of 12.5% on tobacco is again an attack on legal products that already generates enormous income for the government – around $8billion p.a. Despite this, the illegal market in tobacco is booming costing the government around $1.4billion in lost excise and costing our industry over $400million in lost sales.
A good article from ‘The Telegraph’ in the UK follows on the topic of sugar taxes – a possible future battleground for manufacturers and retailers. AACS will continue to represent our industry on this and other regulatory matters and welcome your feedback and input as well as advice on areas where you may require support.

We are far too fat, but a sin tax on sugar would do nothing to help
Allister Heath
13 Jan 2016
The Telegraph UK
Our calorie intake has fallen dramatically – it’s our sedentary lifestyle that is the real problem
There was a time, just a few centuries ago, when sugar was a rarity in Britain – an extraordinary, costly luxury like pepper or ginger; it was seen as a way to punctuate the bland monotony of food as well as a useful preservative. Paradoxically, given the current debate, sugar in those days was also used, on occasion at least, as a medicine.
The idea that it could be anything but bad for you would be met with incomprehension today. We are seemingly awash with the stuff, and sugar is widely blamed for the explosion in obesity of recent years. It may even end up being hit by punitive sin taxes and its use regulated.
We are right to be deeply concerned about the catastrophic increase in obesity affecting adults as well as children across the Western world. In the UK, over the past four decades or so, the share of the adult population that is formally obese has surged from 8 per cent to around a quarter. This is helping to fuel diabetes, coronary heart disease and various cancers.
“Our average intake of sugar that has either been added to food and drink or that has been released through processing collapsed by 9.7 per cent between 2011 and 2014, according to Defra.”
Like everybody else, I used to think that the problem was simply that we were eating more, gorging on snacks and chocolate. But when I actually started looking into the facts, I was stunned by what I discovered. My lazy assumption was the opposite of the truth. We are consuming far fewer calories and eating less sugar than we used to, according to the Government’s own research and all other corroborating evidence.
Energy intake per person declined 32 per cent between 1974 and 2014, according to Defra’s latest Family Food report, a stunningly counter-intuitive fact. The decline in our energy intake is continuing apace. It fell to an average of 2,142 kcal per person per day in 2014, 4.6 per cent lower than in 2011, according to the same report.
What about the widely held view that much of the country spends its spare time bingeing on fast foods? Energy intake from eating out was 226 kcal per person per day in 2014, 4.2 per cent lower than in 2011. There are plenty of caveats. These are aggregate figures: some eat far more healthily than others. Sadly, social class enters heavily into the equation.
The data are based on surveys and people may under-report consumption. But the results do tally with all other sources of evidence, including supermarket sales and other data, and there is no reason to disbelieve the direction of travel.
What of sugar itself? Are we not consuming ever more of it? The answer, once again, is a resounding no. Per capita consumption is down by a fifth or so over the past few decades. The trend is, if anything, accelerating. Our average intake of sugar that has either been added to food and drink or that has been released through processing collapsed by 9.7 per cent between 2011 and 2014, according to Defra.
Soft drinks, the category most demonised in the current debate, are a case in point: purchases of regular soft drinks (excluding diet versions) have been “on a downward trend since 2011” and fell by 19 per cent between 2011 and 2014.
This was mirrored by a 14 per cent surge in the sale of low-calorie sodas. We aren’t addicted to high fructose corn syrup either. For reasons relating to tariffs and agricultural policy, Americans consume 25 kilograms a year, against less than half a kilogram for us.
That said, it is true that we still eat too much sugar: we derive around 13.1 per cent of our energy from it. While that is down sharply from 15 per cent in 2007, the recommended target is no more than 11 per cent. British consumers as a whole need to continue to cut back – but the real story is the dramatic progress that has already been made, without taxes.
So what is going on? Why are so many people putting on more weight, even as the average Briton eats fewer calories, less sugar, less fat (and, as it happens, drinks a lot less alcohol)?
Clearly, not everybody fits the average; some are consuming more, rather than fewer, calories. But the principal answer is that we have become a shockingly sedentary society. To keep our weight under control, we require even fewer calories than we are now consuming; or we need to exercise much more.
Our lives now revolve around sitting in an office or on a sofa, surfing the web. The collapse in physically demanding manufacturing jobs continues, too few schoolchildren exercise enough, every household owns numerous labour-saving devices, we don’t even need to leave our homes to go shopping and we now all fortunately have central heating, which means that we use up fewer calories trying to stay warm.
A small army of prosperous urbanites spend a lot of time at the gym or cycle to work, but they are unusual.
“Only extremely punitive levies would have a real impact, and these would rightly trigger a political backlash. So what should be done instead?”
A sugar tax would be an absurd, pointless and unfair distraction. Levied at 20 per cent or so, it would have virtually no impact on consumption. Prices would rise by less than that; consumers would also trade down to supermarket “own label” alternatives, or switch to fruit juice or other problematic options. It will hit all consumers, including sensible ones, and disproportionately affect the poor.
The Institute of Economic Affairs has studied what happened when Mexico, Denmark, US states and others slapped taxes on sugar and fat. Consumption fell – but only by a few percentage points; the decline was less that what has been happening naturally in the UK in recent years.
In Finland, a 14.8 per cent increase in the price of confectionary coincided with a trivial 2.6 per cent fall in consumption. The impact on overall obesity rates from such measures are almost zero; in the case of Mexico, as one academic put it, it was “a drop in the calorific ocean”.
Only extremely punitive levies would have a real impact, and these would rightly trigger a political backlash. So what should be done instead? Consumers should continue to gradually and voluntarily cut back on sugar. Schools and hospitals should provide healthier food.
Over time, we need a radical improvement in cooking skills and food awareness, including by teaching children better. Above all, we must exercise far more, starting at school. Better monitoring through wearable technology and apps will be a key part of the answer.
None of this represents a panacea. But dreaming up yet another tax would be a complete waste of time and would do nothing to tackle the greatest, most difficult health crisis of our time.
FAQ
Sugar tax
What is the sugar tax?
A proposal to place an additional tax on sugar-sweetened drinks and other high-sugar products to combat child obesity
Why?
An official report says the NHS could save £15bn and almost 80,000 lives in a generation by weaning the public off its sweet tooth. Today’s children and teenagers are consuming three times the recommended level of sugar (adults fare almost as badly)
Why is it controversial?
Some people resent being taxed for something which causes no harm if eaten in moderation and they don’t want the ‘nanny state’ interfering in their choices
How much would it be?
Nothing is decided, but PHE recommends a 10-20% tax
Is taxation the only solution?
No. In their sugar report, PHE also recommend:
A national programme to reduce sugar content in everyday food and drinks
Reducing price promotions of sugary food and drink
Banning high-sugar foods from supermarket till areas and the end of aisles
Clamping down on advertising sugary products on TV and online
New rules to reduce portion sizes
Could it actually work?
Similar taxes have worked in five other countries, with some methods reducing consumption of fizzy drinks by up to one quarter. A sugar tax on fizzy drinks in Mexico cut sales by 12% in its first year