Opinion: Why war on soft drinks is soft on the truth — Exclusive

By Geoff Parker

- Last updated on GMT

AusBev CEO writes on sugary drinks taxes in this opinion piece. ©AusBev
AusBev CEO writes on sugary drinks taxes in this opinion piece. ©AusBev

Related tags Sugar sugar tax Soda tax Australia

As governments across the world grapple with the problem of expanding waistlines, a tax on drinks containing sugar continues to be thrust into public discourse and promoted as a key strategy to tackle the complex and costly problem of obesity, writes Geoff Parker, CEO of the Australian Beverages Council.

What pro-tax advocates omit from the dialogue, however, is that this intervention lacks evidence from anywhere in the world that such a tax has a measurable impact on obesity rates, and analysis has shown it doesn’t improve diets either.

In the UK, for example, emerging evidence suggests that the Soft Drinks Industry Levy (SDIL) has not only had little effect on obesity, but it hasn’t had any discernible impact on consumer behaviour.

According to research house, Nielsen, 62 per cent of British shoppers indicated they have not changed their consumption since the tax came into effect in April 2018. Most notably, the research also suggested the number of British consumers who said they intend to continue purchasing sugar-sweetened beverages has increased after the introduction of the SDIL, from 31 per cent in February to 44 per cent in June.

Mexico, where a soft drinks tax has been in effect since 2014, is another case in point. While often heralded as an example of how effective a tax on sugar can be in reducing consumption, again, there isn’t credible evidence to support this claim. Instead, what actually happened according to tax receipts from the Mexican Secretariat of Finance and Public Credit (Treasury), was a very small decline in sales/consumption of less than two per cent in the first year of the tax, with a recovery in sales in year two to pre-tax levels, and growth in sales thereafter. It is hardly the public health silver bullet that was promised.

Moving north, take Berkeley, California. In that city, where a tax was recently introduced, the previously and largely unknown impact of the substitution effect, where people switch to lesser taxed or non-taxed alternatives, is starting to become clearer.

According to one study, a year after the tax, caloric intake per person from beverages increased by a daily average of 28 calories as people decrease consumption of taxed beverages in favour of non-taxed drinks such as smoothies and fresh-pressed juice.

In Philadelphia, Pennsylvania, the largest city in the United States with a soda tax since Cook County (Chicago and surrounds) repealed its tax in 2017, the lacklustre performance of the tax has left budget holes in many pre-school programs that had been earmarked to be beneficiaries of the tax. 

Further corroborating the lack of global evidence, the New Zealand Ministry of Health commissioned the country’s Institute of Economic Research to analyse the effectiveness of sugar taxes across 47 studies, and found the impact of such taxes on public health was weak.

Clearly, these types of taxes appear to be a quick fix but in reality don’t shift the dial on the problem and, concerningly, usually have unintended consequences such as impacting jobs, budget blackholes or placing more strain on low or middle-income households.

So what change is needed to truly tackle obesity?

In October, the highly-regarded journal, The Lancet, published a piece calling for a new narrative on obesity. In the editorial, the authors indicate ‘efforts to address obesity have been stymied…by faulty framing of the issue that has led to stigmatisation, siloed approaches, political inaction, and an absence of coherent strategies within food and health system’.

The article in The Lancet really resonated with me, and we must move away from a majority focus on personal responsibility to a more holistic, nuanced, collaborative and collective approach to tackling the problem of obesity.

The theme of greater collaboration was highlighted recently by the United Nations in the Political Declaration that was adopted following the third high-level meeting on non-communicable diseases. The consensus document, agreed to by Member States, calls for more collaboration between the private sector (industry), civil society and governments to coordinate, through vehicles such as public private partnerships (PPPs), on evidence-based solutions to bring about real change. It also called on industry to ramp up its reformulation agenda and reduce products high in fat, sugar and salt.

On the ground across the Asia-Pacific region, there are a host of real-life examples where PPPs are making a difference and where industry is stepping up to the challenge by reformulating products.

In Singapore for example, the Government has worked with industry to reduce sugar across products in that country’s ‘war on diabetes’. In Australia, the beverage industry, alongside the Federal Minister for Health, recently announced a bold commitment to reduce sugar across the industry’s portfolio by 20 per cent by 2025. Right across our region, companies, big and small, are increasing choice for consumers through both reformulating sugar content and​ introducing smaller pack sizes.

Reformulation and smaller pack sizes, as key strategies with the greatest impact on obesity, have been identified in a McKinsey Global Institute report, which looked at a raft of interventions and ranked these according to a number of criteria. Unsurprisingly to industry insiders and some governments, reformulation and portion (pack) sizes were found to be the most effective ways to tackle obesity, with a tax towards the bottom of the list.

As we look towards 2019 and beyond, the non-alcoholic beverage industry welcomes the opportunity to work with key stakeholders across the region, including governments, health organisations and allied industries, on a collaborative, aligned and coordinated strategy, and to embracing a collective approach to tackle this serious social problem – one that we all agree must be solved.

Geoff Parker is the Executive Director – Asia-Pacific Regional Group, the International Council of Beverages Associations (ICBA) and Chief Executive Officer, the Australian Beverages Council.

Related topics Policy Oceania Supply chain Beverages

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