If you haven’t already heard, a tax on sugar-sweetened drinks is set to be introduced in May. Whether you run a pub, café or restaurant, the tax will almost certainly have an impact on your business. Increasing prices, a reduction in sugary drink consumption and higher levels of demand for healthier alternatives are all predicted.
What is the Sugar Tax? How will it affect you? And most importantly, how can you make sure your business is fully prepared for the changes?
What is the Sugar Tax?
Officially known as the Sugar-Sweetened Drinks Tax, the Sugar Tax is a piece of government legislation targeted at the producers and importers of sugary drinks.
The levy aims to encourage them to eliminate added sugar, promote healthier options and decrease portion sizes for high sugar beverages; all in a bid to tackle rising obesity levels.
When does the Sugar Tax start?
How does the Sugar Tax work?
The tax will apply to non-alcoholic, water-based or
juice-based drinks which have an added sugar content of 5 grams per 100
millilitres and above. Pure fruit juices and milk-based products will not be
liable, unless sugar is then added to them.
Drinks containing between 5 and 8 grams of sugar per 100
millilitres will be taxed at a rate of 20c per litre. Drinks with 8 grams per
100 millilitres or more will be taxed 30c per litre.
How will the Sugar Tax affect you?
While the Sugar Tax is aimed at manufacturers and importers, it is highly likely that the costs they incur will be passed completely on to your business. For example, if you are purchasing 100 litres of drinks per week with a 30c taxation, such as Coca Cola, you could be facing an extra €1,560 in charges per year. An increase in costs can be damaging for any business, no matter how small.
Therefore, you need to be prepared.
How to get your business ready for the Sugar Tax
Put yourself in the best position for a seamless transition
by following these six steps.
1. Pass On The Difference
Leading soft drinks manufacturer Britvic recommends businesses pass 100% of the levy on to their customers. So, whether you are a café selling a small can of soft drink or a pub serving a full pint of Coke, you should certainly consider charging patrons the full levy amount. Trialling these added charges will help you analyse the effect it has on your revenue, while also allowing you to gauge your customers’ reactions.
Raising the prices of your taxed drinks will help to ensure all extra costs are covered and ultimately work to protect your profit margins.
2. Examine Your Existing Range
3. The Surge of Sugar-Free
A rise in price could see a significant decline in the popularity of sugary drinks. Following the implementation of a similar tax on sugary drinks in Mexico in 2014, consumption fell by 7.6% over a two-year period. Purchases of untaxed drinks increased on average by 2% over the same period (University of North Carolina and Mexican National Institute of Public Health, 2017).
It’s important to monitor whether the changes
you make affect your customers’ drinking habits. This will give you the
information you need to determine how much time and money you should invest in purchasing,
promoting and advertising healthier alternatives.
4. Advertise Clearly
Think about splitting your drinks menus between sugary and sugar-free. You should clearly advertise the difference in price between taxed and untaxed drinks to avoid any customer confusion. Printing a small explanation about the sugar tax on your menu will also communicate clearly to your customers the reasons for any price rises you may choose to implement.
Our selection of high quality chalkboards lend themselves brilliantly to attractive and colourful drawings, so consider creating delicious, untaxed fruit juices and smoothies and advertising them with artistic and vibrant messages outside and in-store.
If you're looking for somewhere to store and serve your new freshly-made juices, our collection of attractive and highly practical cold drink dispensers offer the ideal solution.
5. Staff Education
As you know, your front-of-house staff are usually the first and last point of contact for your customers. So it’s important that they are completely knowledgeable on all things Sugar Tax.
Holding team briefings will help to educate your employees on the ins-and-outs of the legislation. Quizzes will also provide a more engaging form of learning, with prize offers giving your staff an incentive to really get to grips with the tax and your product range. This will help to make sure all employees are able to easily explain the legislation and provide your customers with detailed information on all of the sugar-free options you offer.
Holding team briefings will help to educate your employees on the ins-and-outs of the legislation. Quizzes will also provide a more engaging form of learning, with prize offers giving your staff an incentive to really get to grips with the tax and your product range. This will help to make sure all employees are able to easily explain the legislation and provide your customers with detailed information on all of the sugar-free options you offer.
6. The Guest Experience
Preparation is Key
The Sugar Tax will affect everyone differently. If you’re a
high end restaurant, you might not be impacted as much as a pub or café. You
should always do your research on the volume of sugary drinks you stock, but
these tips will help you get a head start on the competition and make sure you
are fully prepared for the legislation come May 1st.
