RETAILERS are being advised to understand and prepare for an expected shift towards the low-sugar drinks category ahead of the introduction of the Soft Drinks Industry Levy (SDIL) on Friday, 6 April.
The SDIL, also known as the ‘sugar tax’, is being introduced by the Westminster government to encourage consumers towards healthier options and has already prompted manufacturers to reduce the amount of added sugar in their soft drinks.
There are two bands proposed in the levy: one applies to soft drinks with five or more grams of sugar per 100ml; the second applies to soft drinks with a sugar content over eight grams per 100ml. Pure fruit juices and milk-based drinks, as well as those below the sugar content threshold, are exempt.
As an example, Coca-Cola 1.5L will now be priced at £1.99 or three for £3.30 after the levy, whereas Monster Origin 500ml will have a new price mark of £1.35. Additionally, Pepsi Regular 2L will now be priced at £2.09 and Red Bull 250ml will have a new price mark of £1.29 following the levy.
The low-sugar drinks market is currently worth more than £460m in the convenience sector and is expected to reach £575m by 2019 as a result of the levy.
Landmark Wholesale is among those currently advising retailers to prepare for the changes. MD John Mills said: “Retailers should view the SDIL as a positive, mainly because it provides a great opportunity to review the mix of full and low sugar drinks and increase your sales.
“As the SDIL is to encourage consumers to choose low or sugar-free soft drinks to benefit their health, retailers should expect to see a rise in demand for low and no-sugar drinks and consumers switching into other options like still and sparkling water and flavoured water.
“If you haven’t already, start thinking now about layout, range and stock so that you’re prepared for when the levy takes effect. Essentially, it’s recommended that you stock a wide range of zero and low-sugar products in addition to core range full sugar drinks.
“Many manufacturers have already reformulated products so the sugar levy doesn’t impact them, but some favourite products with a high sugar content such as Coke and Pepsi will be affected and experience a price increase as a result. So, it’s also important to be prepared to explain the industry levy and what it means to your customers who are likely to question price rises of sugary drinks.”