Smaller cooldrink pro­duc­ers are man­ag­ing to re­duce sugar con­tent from the more-or-less stan­dard 11g per 100ml to be­tween 7g and 8g

CityPress - - Business - DEWALD VAN RENS­BURG dewald.vrens­burg@city­ Source: Xxxxxx

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

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