Effective sugar taxation: Two factors crucial for success, claims New Zealand study

By Pearly Neo contact

- Last updated on GMT

A new study from the University of Otago has highlighted the overall effectiveness of sugar taxation in several countries where it has been implemented, but stressed that both taxation design and policy consistency need to be taken into account to increase chances of success. ©Getty Images
A new study from the University of Otago has highlighted the overall effectiveness of sugar taxation in several countries where it has been implemented, but stressed that both taxation design and policy consistency need to be taken into account to increase chances of success. ©Getty Images

Related tags: New zealand, sugar tax

A new study from the University of Otago has highlighted the overall effectiveness of sugar taxation in several countries where it has been implemented, but stressed that both taxation design and policy consistency need to be taken into account to increase chances of success.

A sugar-sweetened beverage (SSB) tax of 10% was found to be positively associated with a 10% decline in SSB purchases and dietary intake, with larger taxes recommended for larger SSB consumption declines.

The study was conducted via a meta-analysis of studies conducted on 17 jurisdictions to compare SSB purchase and consumption between pre- and post-taxation areas, or taxed vs untaxed areas. The majority of jurisdictions that were found to fit the study criteria were mostly centred in Europe and the United States.

According to the researchers, some 65% of outcomes analysed reported ‘significant reductions in SSB sales, purchases, or dietary intake’​. 

“This new review presents compelling evidence that sugary drink taxes result in decreased sales, purchasing or dietary intake of taxed beverages,”​ said lead researcher Dr Andrea Teng.

“It shows taxes on sugary drinks are an effective tool to reduce consumption, and we know from other research that the high consumption of sugary drinks increases the risk of obesity, diabetes and dental caries.”

Although the study saw all individual studies reviewed showing a tax-associated reduction in SSB consumption, the impact in some settings was greater than others, and this was associated with the design of the tax, as well as other existing policies found in the jurisdiction.

As an example, Chile showed a 21.6% in soft drink purchases from 2014 to 2018 after it both increased SSB tax and decreased low-sugar beverage tax.

“Applying tax by thresholds of sugar content, rather than as a percentage of price, also appeared to be important for determining a more favourable impact,”​ said co-researcher Dr Amanda Jones.

The study also mentioned several other possible reasons for these differences, including industry response, consumer preference, alternative availability, price sensitivity and public awareness amongst others.

“Some of the differences found in these studies may also be due to non-price mechanisms. For example, a tax may signal to the public the seriousness of the health concern associated with consuming a product,”​ she added.

The researchers also recommended larger taxes in order to further decrease SSB consumption where implemented, especially if associated health benefits are targeted.

These recommendations come at a crucial point in New Zealand’s sugar-tax deliberation, where the industry appears to be firmly against such a policy​, whereas academics are standing behind it​.

“[The onus with self-regulation] falls on individuals to regulate the quantity and serving size of sugar they consume from SSBs. However, [our study has shown] SSB consumers are less likely than others to try to avoid sugar or calories,”​ said University of Otago researcher Dr Kirsten Robertson.

On the other side of the coin, New Zealand Food and Grocery Council CEO Katherine Rich previously told us that: “​Sugar taxes have not worked to reduce obesity in any countries where they have been implemented. Not one.​”

As of February this year, documentation brought forth by political party ACT​ showed that the New Zealand Ministry of Health was still actively considering a sugar tax, although Prime Minister Jacinda Ardern had previously ruled it out ‘at this time’​.

Taxes and reformulation

Sugar taxes were also recommended to drive reformulation manufacturer reformulation efforts towards products with reduced sugar content.

This has already been seen in countries such as Malaysia, where local soft drink brand F&N announced that it would reformulate some 70% of its product portfolio​ in response to the country’s recently-implemented sugar tax on July 1​.

This announcement took place in May before the actual tax implementation, a pattern that was also seen in the UK where companies moved ‘to reformulate sugar levels downward even before their tax was introduced in April 2018’​.

Additionally, the researchers saw sugar taxation as an effective measure towards reimbursing the financial costs that chronic diseases can bring to countries.

“SSB taxes have been reported to be extremely cost‐effective and can provide resource constrained governments with additional revenue that can be invested back into health and obesity prevention,”​ they said.

All in all, Dr Teng concluded that: “It is probably inevitable that this type of tax, which is highly targeted at protecting child health, will need to be seriously considered by New Zealand politicians.”

 

Source: Obesity Review

Study: Impact of sugar‐sweetened beverage taxes on purchases and dietary intake: Systematic review and meta‐analysis

Authors: Teng, A.M. et. al.

https://doi.org/10.1111/obr.12868

Related topics: Policy, Oceania, Supply chain, Beverages

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