Britvic, which produces and sells Pepsi in the UK, has dismissed concerns over the looming sugar tax and pledged to change its drinks recipes.
After reporting broadly positive first-half earnings yesterday, the firm's chief executive Simon Litherland said the biggest risk to his business and others in the sector is the consumer preference for "sugar, natural and artificial sweeteners" and the growing demand for "better-for-you soft drinks".
Litherland also said he was "disappointed" in the sugar tax that George Osborne announced this March to tackle the UK's obesity epidemic. Nonetheless he remains resolutely upbeat. According to the Financial Times, he says the trend towards healthier drinks is "not hurting our business" and is in fact "an opportunity". He also says that two thirds of Britvic's drinks do not contain enough sugar to be taxed under the proposed rules and that recipe changes will in any case continue to reduce added sugar and calories.
The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
SUBSCRIBE & SAVE
Sign up for The Week's Free Newsletters
Join more than 350,000 subscribers and keep yourself informed with a selection of The Week’s most interesting, enlightening and entertaining stories - plus daily puzzles.
Join more than 350,000 subscribers and keep yourself informed with a selection of The Week’s most interesting, enlightening and entertaining stories - plus daily puzzles.
Latest Videos FromThe Week
"Britvic already offers a broad range of products and has taken significant steps in recent years to reduce added sugar and reformulate drinks, using Stevia [a natural sugar substitute] for example, and remains committed to a 20 per cent calorie reduction by 2020," Litherland added.
In terms of UK market share of carbonated drinks, the company lags behind Coca Cola and accounts for just 12 per cent of the UK drinks market overall, but in the no-added-sugar market it boasts a market-leading share of 30 per cent.
"As the category leader, removing added sugar from this family brand is appropriate for the long term," Litherland told The Independent.
Britvic has been reducing sugar in its drinks for the past four years but this is no guarantee of higher sales. The axing of the added-sugar variety of Robinson's cordials has been partly blamed for an eight per cent slide in still drink revenues in the past six months. Carbonated drinks, on the other hand, rose 2.4 per cent on the back of a leap in sales of sugar-free Pepsi Max.
Pre-tax profits at Britvic rose eight per cent to almost £54m, the sales driven by the acquisition of the Brazilian juice manufacturer Ebba, which Britvic bought last year.
Under the new sugar tax, from 2018 drinks with over 5g of sugar per 100ml and over 8g per 100ml will be hit with greater taxes in two bands. The Evening Standard reckons the new levies could add as much as 24p to the price of a litre of fizzy drink.
