WHEN GOV­ERN­MENTS CRACK DOWN ON SU­GAR

Global obe­sity has more than dou­bled since 1980 and anti-su­gar lob­by­ists the world over are in­creas­ing pres­sure on gov­ern­ments to reg­u­late con­sump­tion of the re­fined car­bo­hy­drate. How will a lo­cal tax on su­gar-sweet­ened bev­er­ages im­pact SA’s su­gar habit a

Finweek English Edition - - FRONT PAGE - By Mandy de Waal

cut­ting out su­gar to fight the bat­tle of the bulge isn’t easy. It means avoid­ing en­tire sec­tions of the su­per­mar­ket. Su­gar i s ob­vi­ously found in prod­ucts like cake mix or jelly, but read the food la­bels, and you’ll also find it is a main­stay in spreads, condi­ments, sauces, rubs, ce­re­als and dips.

Su­gar is also found in brown bread, canned chunky veg­etable soup and fresh tra­di­tional pork sausages. You get the pic­ture – there’s a mas­sive num­ber of man­u­fac­tured food prod­ucts that con­tain the sweet stuff.

But the big cul­prits are those sug­ary drinks. City Press jour­nal­ist Grethe Koen did the maths – one can (330ml) of Fanta Grape con­tains nine tea­spoons of su­gar. Coke has seven. How much su­gar should we con­sume? The World Health Or­ga­ni­za­tion rec­om­mends a daily max­i­mum of six tea­spoons if you want to re­main healthy.

Dur­ing his Fe­bru­ary Bud­get Speech, fi­nance min­is­ter Pravin Gordhan an­nounced a planned tax in­tended to force South Africans to re­con­sider the amount of su­gar

The pro­posed 20% tax on bev­er­ages sweet­ened with su­gar will net the gov­ern­ment an ex­tra R7bn each year.

they con­sume cour­tesy of sweet­ened bev­er­ages. “The pro­posal is to tax su­gar-sweet­ened bev­er­ages (not su­gar per se) and it is in­tended for im­ple­men­ta­tion on 1 April 2017. The de­sign (in­clud­ing the rates) of the tax is still un­der con­sid­er­a­tion,” the Na­tional Trea­sury stated in a writ­ten re­sponse to fin­week’s ques­tions about the levy.

Data from Price­less-SA, a pub­lic health re­search in­sti­tute at Wits, in­di­cates that the pro­posed 20% tax on bev­er­ages sweet­ened with su­gar will net the gov­ern­ment an ex­tra R7bn each year. Im­por­tantly, these re­searchers say the move will have a di­rect ef­fect on obe­sity. Price­lessSA reck­ons that this tax could help curb South Africans’ en­ergy in­take by some 36kJ a day, and that this would de­crease obe­sity by 3.8% in men and 2.4% in women.

The Na­tional Trea­sury says it can­not quan­tify any out­comes of the soft drinks duty it will soon in­tro­duce. “Ex­cise taxes gen­er­ally tar­get con­sump­tion of spe­cific prod­ucts with the in­ten­tion of in­ter­nal­is­ing ex­ter­nal costs re­lated to those prod­ucts.There­fore, the tax is ex­pected to re­duce the de­mand or con­sump­tion of [su­gar-sweet­ened bev­er­ages].” The Trea­sury adds that, in its view, the pro­posed tax won’t af­fect su­gar pro­duc­tion di­rectly.

Will the tax cut it?

But the su­gar in­dus­try is not con­vinced the tax will im­pact con­sumers the way Trea­sury in­tends. John du Plessis, man­ag­ing di­rec­tor of the su­gar and milling divi­sion at

RCL Foods, says any ef­fect on the com­pany would be lim­ited. “In­di­ca­tions are that such taxes do not de­liver the de­sired out­comes,” Du Plessis says, adding that in Mex­ico there was only a mod­er­ate re­duc­tion in con­sump­tion af­ter a sim­i­lar state duty was im­ple­mented in that coun­try.

Illovo won’t be drawn on whether a soft drinks duty could af­fect its bot­tom line. “Un­til the draft White Pa­per on the pro­posed bev­er­age tax is in the pub­lic do­main for con­sid­er­a­tion and com­ment, it is very dif­fi­cult to make any for­ward as­sess­ments, par­tic­u­larly around the po­ten­tial im­pact on Illovo’s rev­enues in South Africa,” says Gavin Dal­gleish, group man­ag­ing di­rec­tor of Illovo. “Our un­der­stand­ing so far is that the tax will be ap­plied at source, in other words, at the man­u­fac­turer’s door.”

Dal­gleish adds: “Against the back­ground of greater poverty lev­els, lower obe­sity in­ci­dence and rel­a­tively much lower per capita su­gar con­sump­tion rates across the group’s other coun­tries of op­er­a­tion (Tan­za­nia, Malawi, Swazi­land, Mozam­bique and Zam­bia), where su­gar is con­sid­ered a sta­ple in­gre­di­ent, we would not ex­pect the in­tro­duc­tion of a sim­i­lar tax. In both Malawi and Zam­bia, the group’s re­fined su­gar is for­ti­fied with Vi­ta­min A and is there­fore seen as a con­trib­u­tor to good health as op­posed to a de­trac­tor.”

He says that it is dif­fi­cult to de­ter­mine ex­actly what kind of ef­fect the tax the Trea­sury pro­poses will have on peo­ple who love su­gar: “Pre­dict­ing con­sumer be­hav­iour is a com­plex task. Nev­er­the­less, ex­pe­ri­ence has shown that food­stuff con­sump­tion pat­terns are very dif­fi­cult to change and hence, while there may be a re­duc­tion in con­sump­tion at the point of price in­crease, con­sumers gen­er­ally re­turn to pre­vi­ous con­sump­tion l evels over time.”

Den­mark has had a tax on sug­ary drinks as far back as the 1930s, but in 2013 law­mak­ers re­pealed the duty and aban­doned plans for a broader su­gar tax. The gov­ern­ment pledged to look at other ways of curb­ing obe­sity be­cause Danes sim­ply hopped bor­ders to get their fix, which boosted busi­nesses in neigh­bour­ing coun­tries but harmed Dan­ish com­pa­nies in­volved in the pro­duc­tion and dis­tri­bu­tion of fizzy drinks.

Glob­ally, the anti-su­gar lobby has gained sig­nif­i­cant in­flu­ence and mo­men­tum in re­cent years. Su­gar taxes are al­ready en­trenched in Chile, Nor­way, France, Fin­land and Hun­gary, as well as a num­ber of states in the US. In July 2015, the US Food and Drug Ad­min­is­tra­tion rec­om­mended a daily limit for su­gar for the first time, at no more than 12.5 tea­spoons a day for some­one over the age of three.

Civil so­ci­ety vs Big soda

Cities have also taken on su­gar. In Cal­i­for­nia the Berke­ley Healthy Child Coali­tion won a land­slide vic­tory in a cam­paign ti­tled Berke­ley vs Big Soda. The re­sult was that in Novem­ber 2014 a soda tax was in­tro­duced in the city, which is sit­u­ated on the San Fran­cisco Bay’s eastern shore. The sov­er­eign Caribbean is­lands of Bar­ba­dos and Do­minica fol­lowed suit in Au­gust 2015.

In the UK, celebrity chef, Jamie Oliver, a vo­cal op­po­nent of the su­gar in­dus­try, is call­ing for a tax on the sweet stuff.

Pulse To­day, a UK mag­a­zine for health pro­fes­sion­als, polled doc­tors for their opin­ions on the is­sue. In 2014, 52% of gen­eral prac­ti­tion­ers sup­ported the no­tion of a su­gar tax, with 40% op­pos­ing it. By the fol­low­ing year, 67% sup­ported such a tax, with only 25% op­pos­ing it.

This year, the Bri­tish gov­ern­ment an­nounced that a su­gar tax would be levied against the soft drinks in­dus­try, to be im­ple­mented in 2018. The plan is for man­u­fac­tur­ers to be levied. Funds gen­er­ated will be

spent on sports fa­cil­i­ties for pri­mary schools.

In­dia is tak­ing a hard-line ap­proach and pro­pos­als from a gov­ern­ment-ap­pointed panel in­di­cate that the planned tax on su­gar-sweet­ened bev­er­ages could be as high as 40%. In re­sponse, Coca-Cola says it may have no other op­tion but to close down fac­to­ries be­cause of the im­pact this would have on the busi­ness in that re­gion.

Lo­cally, the war on su­gar gained sig­nif­i­cant trac­tion when con­tro­ver­sial sports sci­en­tist Tim Noakes turned his back on car­bo­hy­drates in De­cem­ber 2010, af­ter de­vel­op­ing in­sulin re­sis­tance. Up un­til that point Noakes, the co-founder and ex­ec­u­tive co-di­rec­tor of the Sports Science In­sti­tute of South Africa, had ad­vo­cated a high carb diet and carbo-load­ing diet in his book, Lore of

Run­ning, which was con­sid­ered the lo­cal run­ner’s bi­ble. More re­cently Noakes co-au­thored The Real Meal

Rev­o­lu­tion, a high-fat, low-car­bo­hy­drate (HFLC) diet book with Sally-Ann Creed, Jonno Proud­foot and David Grier. The pub­li­ca­tion be­came a best­seller and is cur­rently on its 16th edi­tion, with over 200 000 copies sold. Also known as Bant­ing, at the heart of this diet is a list of foods that are pre­ferred, re­stricted or taboo be­cause they’re deemed toxic or too high in car­bo­hy­drates. In Bant­ing terms, su­gar is an ab­so­lute taboo.

But has the Bant­ing craze re­duced su­gar sales at stores? Lo­cal re­tailer Wool­worths claims i n a writ­ten state­ment that it has seen a “de­cline in su­gar con­sump­tion vol­ume over the past year and it is con­tin­u­ing, with the de­clines shown in the pre­vi­ous year”. The re­tail chain says it has wit­nessed growth in sales of al­ter­nate sweet­en­ers deemed health­ier by con­sumers. “Su­gar al­ter­na­tives have grown sig­nif­i­cantly in the last two years as cus­tomers pre­fer to switch to al­ter­na­tives such as Xyl­i­tol and Ste­via,” Wool­worths writes.

Pick n Pay’s Leanne Kiezer, an in-house di­eti­cian, says: “Aware­ness of the ben­e­fits of a bal­anced diet has grown in re­cent years, and cus­tomers are in­creas­ingly choos­ing op­tions that con­tain less su­gar or that use al­ter­na­tives to su­gar.”

A healthy ar­gu­ment

But what does science say about this sweet, re­fined car­bo­hy­drate? Var­i­ous sci­en­tific re­ports have high­lighted su­gar’s role in caus­ing obe­sity. In Oc­to­ber 2012 two sep­a­rate sci­en­tific stud­ies pub­lished in The

New Eng­land Jour­nal of Medicine in­di­cated that su­gar, while not di­rectly re­spon­si­ble for di­a­betes, was a key fac­tor in con­tribut­ing to obe­sity.

As Mor­gan Stan­ley Re­search states in its 2015 pa­per called The Bit­ter After­taste of Su­gar, the con­sen­sus view is that “su­gar is in­creas­ingly be­com­ing the main scape­goat for the grow­ing epi­demic of obe­sity and di­a­betes.”

Ac­cord­ing to the South African Su­gar As­so­ci­a­tion’s (Sasa’s) Trix Trikam, the lo­cal sec­tor, “as with other su­gar in­dus­tries glob­ally, is mak­ing ef­forts to pro­vide science-based in­for­ma­tion about su­gar and health to the pub­lic. This is be­cause there is an in­creas­ing amount of in­ac­cu­rate in­for­ma­tion,” he says, and adds: “Pro­vid­ing science-based in­for­ma­tion to the pub­lic is a chal­lenge, par­tic­u­larly when so much in­ac­cu­rate in­for­ma­tion has al­most be­come so-called ‘fact’.”

When it comes to bet­ting on who will win or lose the su­gar war, Mor­gan Stan­ley Re­search is a lit­tle more spe­cific: “The global Calo­rie Car­bon­ated Soft Drinks (CSDs) in­dus­try is likely to be the key loser from a de­cline in su­gar con­sump­tion. So far mid­calo­rie prod­ucts and sweet­ener in­no­va­tion in the CSDs in­dus­try have gen­er­ally failed. The out­look for the Food Pro­duc­ers is de­pen­dent on how com­pa­nies choose to de­velop their prod­uct ranges. Those that proac­tively adapt their port­fo­lios should fare best.”

In South Africa, the su­gar in­dus­try is unit­ing in an ef­fort to lobby gov­ern­ment. “With re­gard to the pro­posed tax on sweet­ened bev­er­ages, the su­gar in­dus­try will en­gage closely with gov­ern­ment to un­der­stand its think­ing and its in­ten­tions,” says Sasa’s Trikam.

Illovo’s Dal­gleish says: “The su­gar in­dus­try, on be­half of grow­ers and pro­duc­ing com­pa­nies, has an es­tab­lished gov­ern­ment en­gage­ment process on su­gar/ health de­vel­op­ments and is­sues. A di­a­logue with the gov­ern­ment to un­der­stand the mo­ti­va­tion and in­ten­tions be­hind the pro­posed tax would nat­u­rally form part of this en­gage­ment process.”

RCL Food’s Du Plessis ex­pands: “The mes­sage will be about the neg­a­tive im­pact on our in­dus­try, which does so much for ru­ral de­vel­op­ment in this coun­try and, se­condly, that it’s gen­er­ally opined that these taxes are gen­er­ally not con­sid­ered to work.” He be­lieves that if any­one will be harmed by the su­gar tax, it is most likely to be emerg­ing and small-holder farm­ers.

The Bev­er­age As­so­ci­a­tion of South Africa (Bevsa) will be join­ing the bat­tle against gov­ern­ment over the tax. It has stated that it is “ex­tremely dis­ap­pointed” by the Bud­get an­nounce­ment of a dis­crim­i­na­tory tax on su­gar-sweet­ened cooldrinks. “If the min­is­ter’s in­di­cated in­ten­tion is to ‘curb ex­ces­sive su­gar in­take’ then the ev­i­dence – from other mar­kets that have taken this path and adopted such mea­sures – in­di­cates that this ini­tia­tive will surely fail,” Bevsa says in a writ­ten state­ment.

In some cases, the pro- su­gar l obby has been suc­cess­ful in pro­mot­ing its cause. Slove­nia scrapped plans for a su­gar tax af­ter busi­ness lead­ers demon­strated that it would be a bur­den on that coun­try’s econ­omy. In cer­tain US states, in­dus­try also pre­vented soft drink du­ties from be­ing writ­ten into law.

Su­gar taxes are al­ready en­trenched in Chile, Nor­way, France, Fin­land and Hun­gary, as well as a num­ber of states in the US.

Su­gar cane fields in KwaZulu-Na­tal

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