The levy will also be expanded to include more beverages: with the threshold at which the tax kicks in from lowered from 5g of sugar per 100ml to 4.5g sugar per 100ml.
RTD coffee, pre-packaged milk-based and milk-alternative drinks with added sugar like supermarket milkshakes, flavored milks, sweetened yogurt drinks and chocolate milk will all be covered by the expansion of the levy.
Fermented milk and yogurt drinks, such as kefir and pre- and probiotic drinks, will also be subject to the levy.
Drive towards reformulation
The UK’s Soft Drinks Industry Levy was introduced in 2018, with exceptions for milk-based drinks and milk alternatives.
The key point of the levy has been the drive towards reformulation: many brands in the UK reformulated below the 5g and 8g thresholds of the levy (the levy has two tiers: a higher and lower rate depending on sugar content).
In fact, between 2015 and 2024, the levy has cut sugar levels in affected products by almost half, according to the UK government.
Beverage manufacturers have until January 1, 2028 to adapt and reformulate according to the new rules.
The UK government estimates the changes could cut 17 million calories a day from the nation’s daily intake. With the UK now having the third highest rate of adult obesity in Europe, this poses a ‘critical public health challenge’, with obesity one of the root causes of diabetes, heart disease and cancer and costing the National Health Service an estimated £11.4bn a year.
Health campaigners have welcomed the news. Barbara Crowther, Children’s Food Campaign Manager at Sustain says: “This update rightly prioritizes children’s health over corporate profit. The Soft Drinks Industry Levy has brilliantly succeeded in getting companies to reduce sugar and treating sugary milkshakes the same as fizzy drinks is the right thing to do.
“Companies who’ve already reduced sugar will now be rewarded for acting responsibly, whilst those still stacking excess sugar into milkshakes will now have a clear choice: change their recipe or pay for the health harm caused.”
With the new threshold set at the higher 4.5g sugar per 100ml as opposed to the originally proposed 4g sugar per 100ml, industry bodies are pleased to hear the upheaval from the revized SDIL is not as big as originally feared.
“We’re pleased the government has listened to industry and decided to make the changes to the Soft Drinks Industry Levy that it announced today,” said a spokesperson for the Food and Drink Federation.
“The new proposals take into account the costly and technically complex work that companies have to do to bring healthier products to market, and go some way to protecting the investment companies are making to help people follow healthier diets.”
Gavin Partington, British Soft Drinks Association Director General, added: “While this move [from 5g to 4.5g] will create an additional cost burden for industry, including our SME members, we take comfort from the fact that a Government which describes itself as pro-growth has elected not to pursue its original goal of lowering the threshold to 4g per 100ml, which would have been technically challenging for industry."
It also welcomes an end to the uncertainty that had been plaguing the industry since a consultation into the SDIL and proposed changes was announced in April.
“We are also reassured that the Government has committed to making no further changes to the Levy this parliamentary term, as well as deciding against an implementation date of 2027, which would have been damaging for our sector at a time when we are helping to set up a world-leading deposit return scheme to go live in 2027,” continued Partington. “We welcome the Government’s proactive engagement with Industry on this issue.”
Dairy UK Chief Executive Dr Judith Bryans highlights the health benefits of dairy products: providing calcium, protein, B vitamins, iodine, zinc, phosphorus and benefits to gut health. Milk-based drinks can also provide a ‘convenient, affordable and tasty way’ for children to obtain necessary nutrients, she added.
“It’s therefore disappointing that the Government has decided to push ahead with plans to expand the sugar levy, impacting some dairy products,” she said.
“That said, we’re pleased the Treasury took on board feedback about the unique composition of dairy and have included a lactose allowance within their proposals to address this. This will ensure that dairy companies do not pay the levy on naturally occurring lactose, as this is not a public health concern.
“It is also welcome that the Government has increased the sugar threshold and extended the implementation date to 2028; this gives dairy companies valuable time to reformulate their products to meet the sugar thresholds.”
