Retailers urged to prepare for soft drinks levy

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Landmark Wholesale is advising retailers to prepare for the shift towards the low-sugar drinks category, ahead of the Soft Drinks Industry Levy (SDIL) coming into force on April 6.

Industry-leading soft drink brands, including Coca-Cola, Monster and Pepsi, will receive new pricing to coincide with the levy’s introduction.

The SDIL has been introduced by the government to encourage soft drink manufacturers to reduce the amount of added sugar contained within their products, and provide healthier choices for consumers.

There are two bands proposed in the levy: one applies to soft drinks with more than five grams of sugar per 100ml; the second applies to soft drinks with a sugar content over eight grams per 100ml. Pure fruit juices and milk-based drinks, as well as those below the sugar threshold, are exempt.

Landmark has announced that the cost of certain soft drink products in its range will increase. The price of Coca-Cola (1.5ltr PMP) will rise from £1.29 to £1.99 (or three for £3.30) and Monster Original (500ml) will have a new pricemark of £1.35, up from £1.19. Pepsi Regular (2ltr PMP) will cost £2.09, up from £1.69, and the cost of pricemarked Red Bull Original (250ml) will increase from £1.19 to £1.29.

The low-sugar drinks market is worth more than £460m to the convenience sector and is expected to reach £575m by 2019.

Landmark Wholesale managing director John Mills said: “Retailers should view the SDIL as a positive, mainly because it provides a great opportunity to review the mix of full and low sugar drinks and increase your sales.

“As the SDIL is to encourage consumers to choose low or sugar-free soft drinks to benefit their health, retailers should expect to see a rise in demand for low- and no-sugar drinks and consumers switching into other options like still and sparkling water and flavoured water. Independent retailers are already seeing the fastest growth of low-sugar soft drink sales, with a rise of 12.1% compared to 7.8% in the overall market.”

He added: “Many manufacturers have already reformulated products so the sugar levy doesn’t impact them, but some favourite products with a high sugar content such as Coke and Pepsi will be affected and experience a price increase as a result. So, it’s also important to be prepared to explain the industry levy and what it means to your customers who are likely to question price rises of sugary drinks.”

The tax is expected to raise around £385m a year, which will be invested in programmes to encourage children and adults to lead a healthier lifestyle.

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