Smaller cooldrink producers are managing to reduce sugar content from the more-or-less standard 11g per 100ml to between 7g and 8g
South Africa’s soft drink producers are set to introduce sugar-reducing reformulations of their products as National Treasury forges ahead with its new, lower sugar tax. Small producers of so-called B Brands are, however, still upset after the lower tax was announced in the Budget Review last month. The new version exempts the first 4 grams of sugar per 100ml and taxes the rest at 2.1c per gram.
For a 2-litre bottle of Coca-Cola, the original tax would have been about R4.86 or 35% of the current retail price. The new tax is about R2.77 or 20%.
The small producers still fear that the tax will affect them disproportionately and possibly lead to even more concentration in the sector where Coca-Cola is estimated to control more than 80% of the market.
“The new level does not improve things at all,” said Glenn Sheppard, director of Little Green Beverages (LGB). “Four grams is nothing; the average sugar content is 11.5g,” he told City Press.
LGB produces the Refreshhh! brand of soft drinks and Sheppard has been one of the most outspoken critics of the sugar tax.
The structure of the industry means that small companies like LGB will almost inevitably face a proportionally higher sugar-tax burden. This is because small companies tend to sell at a lower price with more emphasis on large bottles.
The tax is based on sugar content so it imposes a higher tax rate on a cheaper cooldrink that has the same sugar content as a more expensive one.
This makes adaptation through reformulation even more urgent for the B Brands.
Brett Naidoo, CEO of Softbev, said that new formulations of its Coo-ee and Jive brands will start appearing in shops in April as old stock makes its way out of the system.
The company has managed to reduce the sugar content of various flavours by between 30% and 50%, he told City Press.
“We use a range of generally available sweeteners. Different sweeteners work better with different flavours. You want to maintain the taste as closely as possible. Some actually taste better with less sugar.”
None of Softbev’s reformulated cooldrinks has managed to fall below the new 4g per 100ml threshold and become sugar-tax free.
“We are not there, but we will look at that and see if it is possible. This is the first step,” said Naidoo.
He added that the reductions mean that the more-or-less standard 11g per 100ml is getting reduced to between 7g and 8g, with variations for different products.
LGB’s Sheppard cites the same range of sugar content for reformulations his company will introduce. % 50 40 30 20 10 0 8.9% 5.1% Coca-Cola 330ml Old tax rate 5.5% 2.0% Coca-Cola LIFE 330ml 34.7% Coca-Cola 2l
LGB’s reformulated products will probably reach shelves next year, in line with a pre-existing voluntary agreement the industry had reached with the department of health. This is for a minimum 15% reduction in sugar content by 2018. “We are close but not quite there yet,” said Sheppard.
JOINT VENTURE Patrice Motsepe, chairman of African Rainbow Capital, shares a drink with Bradley Kark, CEO of KLT Holdings, and Johan van der Merwe, CEO of African Rainbow Capital, at the launch of a new property joint venture in Sandton