This month marks a new era for manufacturers, retailers and consumers as The Soft Drinks Industry Levy, better known as the ‘sugar tax’ comes into full force on 6 April 2018.
Red Star Brands, which offers full service support to disruptive and unique food and drink brands and their founders who wish to launch successfully in the UK, believe the tax presents retailers with the perfect opportunity to be brave, evolve and keep up-to-date with the needs of modern consumers.
The sugar tax is not a ‘catch all’ answer to better health, nor is it a way to educate consumers.
Clark McIlroy, managing director of Red Star Brands said: “Although the sugar tax may seem scary, it’s actually a great opportunity for the sector to address traditional approaches and revolutionise how we market, create and promote soft drinks.
“The sugar tax is not a ‘catch all’ answer to better health, nor is it a way to educate consumers – however, it has pushed the industry to begin embracing products that challenge the status quo and show that sugar does not equal flavour. Under the new proposed tax bracket, some soft drinks can still contain up to 24g of sugar in one 500ml serving, and face no levy; so, it is crucial for retailers to embrace innovation and health when stocking their shelves in order to progress.
“In the wake of the tax, many traditional soft drinks manufacturers have reformulated, but the real industry challenge is renovation versus innovation. We have been monitoring the market and have seen that soft drinks with a focus on ‘better for you’ are outselling traditional categories such as Cola, Carbonates and RTD Juice Drinks. Consumers are voting with their feet and retailers need to use their chiller space wisely.
Red Star brands has a number of ‘better for you’ brands in its portfolio including Bai and Sparkling Ice, both of which pioneer low sugar and maximum flavour.
According to Clark retailers need to follow an ‘EASY’ approach, in order to succeed in a post sugar tax market.
“EMBRACE THE CHANGE – Data captured at the end of January 2018 showed 1.31 billion units of Water sold against a declining 1.26 billion units of Cola* – adding an additional £61 million to the Soft Drinks category in the last 52 weeks. Water + is driving 44% of this growth, commanding higher price points, outperforming Water and increasing its share of the market. It is clear that sugar tax or not, consumers’ consumption has changed and the sector needs to keep up with this demand.
“ALLOCATE MORE SPACE FOR ‘BETTER FOR YOU’ BRANDS – Instead of sticking to traditional sugar laden soft drinks and ultimately passing on the levy to consumers, retailers should open their shelves to low and no-sugar brands and make the brave decisions about what they stock on their shelves. If retailers can’t increase shelf space they’re going to have to take something away, regardless of whether or not it’s a heritage brand that ‘has always been there’. The world has changed and it’s time for us to embrace the future.
“SIGNPOST THE CATEGORY – block the better-for-you brands together, make it easy for shoppers to find the healthier choices. Many people are looking for a functional ‘better for you’ option but are unsure of where it sits in the chiller, make it clear and signpost in store.
“YIELD – Finally, the retailers that are brave and take risks will be able to enjoy profitable growth from creating more room in their chillers for ‘better for you’. The growth of this category, including Water and Water+ isn’t going anywhere, so retailers need to adapt to keep ahead of the curve.
To speak with our team of experts about the latest industry trends, please get in touch: https://www.redstarbrands.co.uk/contact-us. To hear more from Clark, attend the ‘Putting health on the shelf’ panel this month’s National Convenience Show: 16 April 13:45pm – 14:15pm.
*according to IRI Marketplace Data on 28 January 2018