Sugar Tax Aftermath: Global Changes in Sugar Usage

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Sugar seems less sweet to consumers and brands. We provide a global view of this trend, including a spotlight on Latin America, where sugar reduction has led to more health-driven reformulations

 

KerryDigest Fast Facts:
  • Brands around the world are reacting to sugar taxes and changing public opinion about sugar by reformulating products.
  • Because countries in Latin America were among the early adopters of such changes, the results are becoming tangible.
  • One trend there appears to be reformulating for better nutrition beyond reducing sugar.
  • Brands may want to heed these regional lessons as they plan to address this global trend.
KerryDigest Full Scoop:

A handful of new sugar taxes have been introduced since our last sugar tax roundup “The State of Sugar and Health Taxes Around the World”’, published in June, 2018. Rather than review these, in this article we’re also focusing on the effects of sugar regulations on public opinion, purchasing trends, consumer health and ultimately the actions taken by food and beverage brands.

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Around the world, we’ve catalogued the following recent sugar and sugar-tax related news:

  • Following the launch of a UK tax on sugar sweetened beverages (SSBs), tax collection estimates have dropped from £500m a year to £240m, due to manufacturer participation in reducing sugar content in products.
  • One in four shoppers in America are buying fewer packaged foods and beverages to reduce their consumption of sugar, according to the Kerry white paper Sensibly Sweet.
  • In Malaysia, the Ministry of Health launched the Healthier Choice Logo to help consumers better distinguish which products on the shelf are indeed “healthy”; in July 2019 a tax on SSBs takes effect.
  • To track changes around Europe, our team has developed tools including the “Sugar Tax & Nutritional Landscape in the EU tool

During our research, we found several reports from Latin America, which was an early adopter of sugar taxes and sugar reduction efforts. As a result, the next part of our analysis focuses specifically on those countries. We believe the efforts undertaken in Latin America and their subsequent results are a good indicator of how the trend could play out elsewhere in the world. As you read the below, consider what innovations may be needed as the “war on sugar” continues, and what steps brands can take to plan ahead.

Latin America’s Varied Sugar Reduction Approaches

Taxation, voluntary agreements with manufacturers and various nationally-led nutritional initiatives have all been introduced and/or implemented in recent years in Latin America. For example, formal tax measures were introduced in Mexico and Chile and measures were proposed for Colombia and other countries. Throughout this region there have also been a number of more wide-ranging approaches as demonstrated by Chile, which combine taxation and labelling initiatives to prompt consumers to choose lower sugar options, and Brazil, where manufacturers recently agreed to a voluntary sugar reduction. Other initiatives include banning SSB sales in schools and restrictions on marketing of sugary products, such as some cereals.

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For a comprehensive overview, the following Results were included in the PLoSONE journal article “Regulatory initiatives to reduce sugar-sweetened beverages (SSBs) in Latin America”:

Since 2006, 14 LA countries have adopted at least 39 public and private SSB regulatory initiatives across the NUTRE framework. Comprehensive efforts have only been approved by Chile, México and Ecuador, while the rest have comparatively few initiatives. 28 out of the 39 regulatory initiatives were passed by legislative and executive bodies; 11 initiatives represent self-regulatory undertakings by the beverage industries.

Such sanctions and voluntary reductions, in addition to shifting public opinion and other factors, have led to changes across Latin America.

  • A recent Mintel study found that 30% of CSD launches across the LATAM region had a reduced sugar claim in 2018, reflecting the current focus of both the industry and the consumer.
  • In Mexico, where in 2016 it was estimated that over 70% of adults and 35% of children were considered overweight or obese, SSB sales have declined by as much as 10% following the introduction of a sugar tax.
  • Also in the SSB market, Coca-Cola Zero Sugar, introduced to LATAM in late 2017, has had substantial success in the region thanks to growing consumer awareness of the negative health effects of sugar.
  • The Brazilian Health Ministry has gotten the cooperation of the industry in voluntarily reducing sugar in over 1,100 products. Some participating manufacturers have also been making additional voluntary commitments to the reduction of sodium.

As can be seen here, although further official regulations are sure to be enacted in the coming years, we may be entering a manufacturer-led phase of health responses designed to reduce the incidence of diabetes, obesity and other health conditions.

Sugar as a Starting Point—Salt and Fat on the Horizon

Aside from being a voluntary—versus regulatory—sugar reduction, one thing that differentiates the aforementioned partnership between the Brazilian Health Ministry and manufacturers is its focus on sodium. In this instance, sugar reduction appears to be a starting point for broader health-focused efforts, such as the reduction of saturated fat and salt, which are among the mostly negatively perceived nutrients for South American consumers.

This is in line with the growing consumer focus on food as it relates to health. Our article on the global clean label market found that within Latin America, clean label foods are often embraced for their perceived health benefits. A new survey from Arla Food Ingredients found that consumers in Brazil, Columbia and Argentina are willing to pay a higher price for products that are protein-enriched, and that weight management and sugar alternatives are expected to be top of mind for consumers in 2019. Ingredients such as probiotics are also on the rise, as found in a recent white paper from Ganeden.

In response to these trends, local Latin American manufacturers are moving toward total product reformulation, beyond just sugar reduction. The global picture also follows a similar theme with such consumer trends being prevalent in countries around the world. The responses have been broad and significant. Retailers like Lidl, Aldi and Tesco have expressed plans to reformulate private label products so they contain less sugar. Kellogg’s, Nestle and PepsiCo, as part of the International Food and Beverage Alliance, have committed to a “Healthy Food Strategy” through sugar and calorie reduction. This has involved various approaches including inclusion of no-sugar alternatives, reductions in package and portion sizes and the lowering of overall calorie and sugar levels.

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Many such changes have already hit shelves. A Food Drink Ireland study of over 1,700 wide-ranging products—including savoury, confectionary, ready-made and soft drinks—found that sodium levels had dropped by over 25% between 2005 and 2017. Similarly, there were total fat and sugar reductions of 10% and 8%, respectively.

On the flip side, the trend toward sugar reduction is contributing to the growing popularity of alternative sweeteners including stevia, which is seen as a natural, powerful source of sweetness that’s also calorie free. Market Watch reports that the global stevia market is to exceed $1 billion by 2023, and other sweeteners such as breadfruit are also growing in demand.

As reformulation to reduce sugar, salt and calories continues, there’s a need for products designed to provide nutrition and taste while solving for other challenges. Kerry’s TasteSense® portfolio includes innovative solutions across the pillars of sweet, salt, mouthfeel and masking. To learn more about how we can reduce sugar by up to 30%, or salt by up to 50%, all while maintaining the structure, texture, taste and overall mouthfeel of a product, contact us.

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