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
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