Will the sugar tax be extended beyond soft drinks?
Sugar has been hitting the headlines a lot recently. The National Obesity Forum and the Public Health Collaboration have called for a “major overhaul” of current guidelines, stating “a diet low in refined carbohydrates but high in healthy fats is an effective and safe approach for preventing weight gain and aiding weight loss”, and that sugar should be avoided.
Yesterday’s news that the sugar tax on drinks could potentially be pushed across the board on all products with high sugar content only adds to this and got us thinking.
How would an ultimatum to make snacks healthier hit the chocolate industry?
Admittedly it could be a positive for the health of consumers but will food, and in particular chocolate and confectionary companies, suffer if these reports start to materialise? Is it removing choice out of the consumer’s hands?
We already know chocolate isn’t the healthiest food out there, but we enjoy it none the less, and an increase in price would only leave the consumer with less money in their back pocket. 70% of the worlds cocoa production comes from four countries (Ivory Coast, Ghana, Nigeria and Cameroon) who rely heavily on their cocoa bean growth and exports.
Could it impact these nations as well as the consumer brands that dominate the chocolate industry? Namely Mars, Nestle, Mondelez and Ferrero; who between them own 100’s of household chocolate’s.
Could it stump the growth the chocolate market is currently experiencing?
Chocolate is an ingrained part of consumer diet, and even without the potential tax, companies are already starting to adapt and change the way we perceive chocolate, and sugary products on a whole. Is this potential tax really necessary? Mintel provides some interesting statistics on the UK’s chocolate habits…
– 90% of Brits ate chocolate during the last three months.
– Only 5% say they never eat chocolate.
– 1 in 10 eat chocolate once a day or more.
– To future-proof the category, operators have also reduced the size of bars, as in the case of Mars’ Snickers and Mars bars and introduced lower-calorie bars, such as Maltesers’ Teasers bar. The category has also seen a boost in the share of new launches that bear an ethical claim.
A report from Marketline highlights some important figures about the strength of the UK, and the European chocolate market.
– New product launches grew 18% between 2013-2015, Europe (including the UK) accounts for 51% of all launches.
– The UK has had growth (albeit steady) for a number of years and this is expected to continue.
– In 2014, the UK has total revenue of $7,752.7m, a growth rate of 1.5%.
– Our European counterparts France and Germany also experienced growth of 1.8% and 1.9% respectively.
– Chocolate is seen as recession proof and can be relied upon to produce growth in most circumstances. This is partially down to the fact sugar prices have hit a six month low, making the supply reliable.
– Market Volume increased by 1.3% to reach a volume of 606.6 million kilograms. This is expected to rise to 632.2 million kilograms, a rise of 0.9%.
Food and Drink Federation director general Ian Wright encapsulates the industries opinion, stating: “Any extension of taxes on food is most unwelcome. Food and drink manufacturing is the largest manufacturing sector in Britain employing more than half a million people, and the uncertainty that comments like this create will do nothing for the prospects of the industry or to solve the obesity problem in any way.
Across all categories our members are re-formulating and reducing portion size but this can only be done in line with consumer demand. If members go too far too fast consumers move to other products – and that helps nobody.”
Source: MarketLine Industry Profiles draw on extensive primary and secondary research, all aggregated, analyzed, cross-checked and presented in a consistent and accessible style.
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