Will a Sugar Tax Alone Reduce Sugar Consumption?

Probably not significantly. But if food manufacturers comply by reducing sugar content in their products, we could see a gradual swing to greater health benefits for consumers.

South Africans love sugary drinks and foods. This is catching up with us, as the International Diabetes Federation (2015) estimated that about 7% of South Africans over the age of 21 have diabetes. This estimate was at 4.5% in 2010. Even more scary is diabetes in Africa is expected to double by the year 2030.

Numerous articles have been written about ‘hidden sugar’ and sugar being a ‘silent killer’. So, let’s face it, we all know the dangers of sugar. For this reason the South African government will be implementing a sugar tax soon on foods and drinks with a sugar content of more than 4 grams.

It is true, humans in general do not like change and asking South Africans to change their preference for sweet things will be challenging. MD at Coca Cola Beverages South Africa (who will be hard hit by the sugar tax), Velaphi Ratshefola, believes that a more holistic intervention is needed to reduce sugar consumption.

Tax alone is not enough

“People generally find it difficult to respond to policy driven interventions. Directing people’s behaviour towards more healthy lifestyles requires an understanding of the nature of what motivates people as well as the social and economic pressures they face in the real world. When it comes to obesity, this means a tax on sugar-sweetened beverages is unlikely to be the most effective way to change behaviour,” he said. (Business Report, 20 June 2017)

He cites the McKinsey Global Institute report on obesity which shows that portion control – in other words smaller bottles and packages – followed by reformulation (less sugar in each bottle) are the most effective in reducing obesity.

Mexico provides us with a relevant case study – a sugar tax was introduced on 1 January 2014, on carbonated soft drinks containing sugar. Diet drinks were excluded from the tax. Early measures indicated a 10% decrease in consumption of the drinks that were more expensive due to the tax. Their early analysis indicated that a sugar tax is effective.

The question is will consumers change their unhealthy habits once they have been educated or informed about the dangers, etc? If we look at the campaign against smoking and drinking while pregnant, it most definitely had a positive effect.

Where manufacturers can win

Our view at Market Instinct is that, when it comes to sugar consumption, the food manufacturers who take the lead in reducing sugar systematically and educating consumers, will come out the winners. A pro-active approach, as opposed to a forced response is more likely to win over the consumer in the long term.

In our experience, testing products amongst consumers of the category is critical. Through sensory taste-testing, we are able to identify the level of sugar reduction manufacturers can apply at one time, without losing loyal consumers. This will lead to an evolutionary change in products, reducing sugar content over time – without loss of market share.

Related Tag: Market Research Company

Menu