THE SUGAR TAX: THREAT OR OPPORTUNITY?

Maddie Cullen
7 June 2018

The market for fizzy drinks is changing.

When it comes to their health, people are much more proactive now than they ever were before. The health and wellness trend is rocking many boats, but none more so than the food and drink sector.

Because of this, more and more brands are scrabbling to provide healthy alternatives to their once loved products. Greasy burgers and a coke are being traded in for veggie options with a green smoothie on the side.

As well as this, the government has now issued the ‘sugar tax’. In a bid to tackle childhood obesity and unhealthy habits, the tax forced brands to either cut their sugar or pay the price. It may seem like this is all talk, but 86% of people say they want to reduce sugar intake.

So where do sugary drinks brands go from here? Not only is it harder to market sugary drinks, but some consumers are giving them up after years of loyalty.

All about the avocado toast

Let’s look at where the health and wellness trend is booming. Gen Z and Millennials are the obvious place to look. They’re the people who are ditching the old favourites like ‘low-carb’ and ‘fat free’ for real, natural ingredients that are full of nutrients.

Gen Z are particularly proactive in terms of healthy lifestyles. They’re looking online at the influencers dinning on smoothie bowls and coconut water and taking advice from blogs that recommend a healthy lifestyle. And fizzy drinks do not feature.

Younger consumers may be more health conscious than previous generations were, but that’s not to say that other consumers aren’t now taking note. Gen X are redefining the middle age by embracing healthy attitudes and focusing on well-being.

This isn’t all another big ‘fad’ however. Wellness has become an industry in its own right. It’s not just the 15 million Instagram posts. Consumers want to change their lifestyles and are voting with their wallets. Although there is still some confusion over what ‘healthy’ actually means, everyone can agree that sugar is the enemy.

But a lot of drinks brands can’t just completely cut out sugar. Irn-Bru received swathes of backlash from the mere suggestion of halving their sugar, with people stocking piling the product and even creating a petition to stop the change. This is partly wrapped up in how prominent the brand is in Scottish culture but, equally, shows that consumers believe a new formula means a different product. A change of recipe is no longer Irn-Bru.

Petition to stop sugar cut in Irn-Bru               (Image: Change.org)

Coke have stuck to their guns by upping the price of ‘full-fat’ Coke to mitigate the sugar tax, but 40% of people actually say that they’d cut back on drinks spending if there was a price rise. So some brands can’t cut sugar out, but they can’t keep it in.

Seems like a Catch 22, but there are ways around it.

Innovate and create

Change the recipe, or change perceptions? Whatever action the business decides to take in light of the sugar tax, the marketing department has a major role to play.

Cawston Press have used the tax to their advantage. To cut down on sugar they revamped their recipe with a bigger focus on fruit juice – and the message is that they believe they’ve created an even better drink.

Send the kids back to school with a taste for the summer holidays ☀

A post shared by Cawston Press (@cawstonpress) on

Meanwhile, Robinsons Fruit Shoot haven’t taken any action on sugar since cutting out the ‘added sugar’ variant in 2014. Rather, they’re partnering with events like Tough Mudder, where they’ve created Mini Mudder races for children. This alignment with a healthy activity aims to position them better with parents trying to make healthier choices.

Fruit shoot mini mudder               (Image: HolidayPirates)

So market shifts like this can be a chance to affirm what drinks brands stand for. Although not everyone will be happy, as we’ve seen with brands like Irn-Bru, it could actually have a positive effect for others.

Big Brands Club

No one is saying Coke is about to flop because of all this, but they are still affected by the changing tides of sugar consumption. Their response to the tax is to reduce the size of their bottles and up the standard price. But because of this, the brand has promised that their recipe won’t change.

🍒👋 #FeistyCherry #NaturallyFlavored

A post shared by Diet Coke (@dietcoke) on

Although Coke are known for their famous drink, it’s not the only egg in the wider Coca-Cola Company’s basket. Diet Coke sales have soared after the introduction of new flavours and as people opt for a ‘healthier’ version of their favourite beverages.

But it’s not just cola that they control. The company owns plenty of healthy brands such as Innocent. Fruit and veg smoothies are the perfect product for anyone seeking a better drink to treat themselves with. So even if volumes of the famous red Coke cans drop, sales of Innocent should rise.

FRIENDLY REMINDER: this is great.

A post shared by innocent (@innocent) on

Similarly, PepsiCo have plenty of healthier brands in their portfolio, from Lipton to Tropicana and even Kevita kombucha. Kombucha is especially popular as people opt for the natural fizziness in fermented drinks. PepsiCo have seen growth across all these healthy drinks, so the health trend isn’t all bad for them.

So it looks like big players in the sugary drinks market should be safe, but is sticking their guns and relying on other brands to carry them through the best idea?

Survival of the fizziest

We brushed over marketing change when looking at Fruit Shoots, but what does it actually mean?

Some people have rallied to try and stop the Coke Christmas van in hopes of ending unhealthy targeting to kids. To some it seems as if sugary drinks are the enemy. You’d be forgiven for thinking that Coke wouldn’t bat an eyelid at this with such a vast empire, but many greats have fallen for not making the right choices before this.

Blockbuster video ruins             (Image: Destructoid)

Blockbuster Video is perhaps one of the most obvious examples. Their problem, of course, was that they wouldn’t adapt to the changing market. As Netflix was offering film delivery and others allowing digital viewing, Blockbuster held firm in their belief that people wouldn’t stop watching their films. They were partly right. People have never stopped watching films, in fact the industry is booming. But the issue was that the way people consumed film was changing. Blockbuster couldn’t see beyond retail rental stores when they could have started offering alternatives alongside that.

The lesson to be learnt is that people aren’t going to stop consuming fizzy drinks, but how they do it is shifting. Some want no sugar, some want natural ingredients, but brands will do best if they adapt and offer these alternatives alongside their classic products.

People will still choose a Coke, but perhaps less often. Sometimes they might want something healthier. Some brands can innovate, like Cawston Press, others need to change the way consumers see them.

So even for those smaller brands that don’t have other healthier alternatives up their sleeve, there are ways to stay relevant in a health-focused world.

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