Britvic to pass on cost of sugar levy to customers

By Nicholas Robinson contact

- Last updated on GMT

Not so soft: soft drinks are good business for pubs
Not so soft: soft drinks are good business for pubs

Related tags: Soft drinks

Soft drinks giant Britvic, the manufacturer of products including Pepsi, will pass the cost of the sugar levy on to its customers, GB managing director Paul Graham has confirmed.

Speaking at the company’s annual Soft Drinks Report ​(SDR​) release in Hemel Hempstead, Hertfordshire, today (24 March) Graham said: “We will pass on the sugar levy [to customers] and be clear of the price differential. We will explain that and we expect retailers to do the same thing.”

Soft opportunities:

  • 6 in 10 consumers would order a second soft drink if they received great service
  • 4 in 10 are willing to pay more for a better-served soft drink
  • 6 in 10 are likely to come back to an outlet if their drink was served to perfection
  • 64% are likely to order a soft drink special if recommended by staff
  • 52% would order a shared drink if eating out as a group
  • 34% say flavour descriptions are likely to inspire them to buy a soft drink

(Statistics from Britvic's Soft Drinks Report)

He told The Morning Advertiser​: “From Britvic’s perspective, we are clear in terms of the levy that the price people pay and the reason it is there is to affect health and consumer behaviour.

“We have to spread the pricing and pass it through to customers.”

According to Graham, the price rises resulting from the levy are there to change consumers’ and manufacturers’ behaviours, leading them to produce and purchase lower or zero sugar products.

He added: "Britvic as a business has focused on low and no sugar and 70% of our volumes are in that [category]."

Kick in next year

The sugar levy, which was announced in Chancellor Philip Hammond's Budget last year, will kick in next year and will hit sugary water-based soft drinks.

It is expected the tax will raise up to £520m and has been met with heavy criticism from pub industry leaders.

Graham added: “At Britvic, we recognised the impact of the healthy living trend early on and we’ve led the industry in recent years when it comes to adapting to meet consumers’ needs."

He continued: “We’ve taken bold steps to help consumers to make choices that are better for them, removing 19bn calories per year from our portfolio since 2012.

“We’ve also worked closely with many of our customers in the channel to help them adapt their soft drinks offering to provide their customers with the healthy choices they expect today.”

However, consumers and manufacturers alike have become increasingly interested in low and no-sugar soft drinks.

Healthier options was a big trend identified by Britvic at its SDR ​release and is set to grow further, along with premium, in the years ahead.

‘Growing faster’

Sales of low and no-sugar drinks were growing faster than those of full-sugar at +6.8% (£1.9bn) compared with +2% (£4.9bn) respectively, the report stated.

Such trends offer “untapped potential” for the on-trade, which must look to create bigger and better experiences for its customers.

Britvic commercial director Russell Goldman said: “The performance of the soft drinks category in the foodservice and licensed channels in 2016 has been impressive and all of us at Britvic are proud of the part we have played – and continue to play – in driving the category’s growth in the channel.”

He added that foodservice and licensed had never been so competitive and that supporting its customers in increasing sales would remain a priority.

He added: “Competition for the leisure pound isn’t going to get any easier for operators in the year ahead, but the good news for them is that if they get their soft drinks offering right, tailoring it to their customers’ needs and focusing on creating sensational experiences for them, they can unlock further potential from the category and reap the rewards.”

Food and soft drinks was another area operators should pay close attention to. Last year, 2.2bn food occasions in the channel were recorded and 76% of consumers surveyed for the SDR ​said the choice of soft drinks was a “very important” part of the overall meal experience.

Related topics: Soft & Hot Drinks, Soft drinks

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