Tag Archives: Sugar Tax

Is brand loyalty stifling innovation?

Innovation directionThis weekend, I ended up in a heated debate with my future Father-in-law.  We were talking about the recent sugar tax proposal in the UK budget with my Father-in-law arguing that the strongest soft drinks manufacturers should replace their full sugar versions with diet varieties and lead the way for smaller brands to follow.  He explained these were the companies able to make a difference and they should stand up to be counted.

I respect him for his idealism, and agree to some extent that innovation should be driven by the market leaders, which is mostly the case in product development.  However, the rise of smaller product manufacturers and start-ups has disrupted the status-quo of the fast moving consumer goods (FMCG) market with innovation arising from some of the most unexpected places. This got me thinking, brands crave consumer loyalty, for their customers to love their products and what their brand and message stands for, this leads not only to repeat purchase, but also to consumers feeling they own the product, the brand and become fully invested.  Whilst this sounds like an ideal situation, what is the price of consumer this loyalty?  What room does this leave for product innovation?

The sugar tax is a prime example… external pressures are forcing soft drinks manufacturers and brands to reformulate and innovate, but changing products can risk consumers noticing differences, feeling betrayed by their favourite brands and losing the all important consumer loyalty.  This wouldn’t be such an issue for smaller brands with less strong customer associations, and they could even bring them on side with changes and product developments.  For large brands however, this could lead to weakening of brand, lack of consumer trust and eventually big revenue losses.  How can they do both?

Crucially, when innovating, large brands need to remember what they stand for even more strongly than ever.  This provides clear guidance for what a new product needs to achieve and deliver in terms of emotional and conceptual associations for consumers.  Throughout the process, continuously question ‘Does this fit my brand?’.  A fantastic new product may be wonderful, but if it doesn’t align with the key equities and brand message, developers and marketers will have a fight on their hands to gain consumer understanding and trust.  If the answer throughout the new development process from both key stakeholders and target consumers is ‘Yes, this fits with the brand’ a real chance lies ahead, which combined with the right communication can bring consumers along the same journey of development and discovery.  Aligning the sensory characteristics, the consumer emotional and functional conceptualisations as well as the key brand equities, can allow truly innovative product development to not only to succeed, but shine through in the busiest marketplace ever.  Whilst the pressures of government and consumers will continuously shift and change, the driving force behind brand related innovation must be simple and never forget to connect these key touch points.

I doubt my future Father in law realises the level of careful development and reformulation required for new product development, however, he certainly isn’t wrong to lay some of the foundations of product innovation at the door of major global brands.  Let’s just hope they are ready for it!

Soft Drinks

UK soft drinks industry need to start budgeting

The launch of the latest UK budget has firmly put sugar in the firing line.  George Osborne has announced a tax on large manufacturers of sugar-sweetened soft drinks they produce or import.

Sugar-sweetened soft drinks will be taxed in two distinct bands, those with a total sugar content above 5% (5g per 100ml) and a higher band for those with 8% added sugar. Details and definitions of what is considered ‘sugar’ are still unclear, but ‘pure’ fruit juices and milk based drinks will be excluded.  Also small scale manufacturers will not have to pay this levy, which will be placed onto manufacturers directly in two years time.  Will this additional charge be passed on to consumers?  We’ll have to wait and see!

The classification of sugar in the budget will need further clarity.  Assuming ‘sugar’ is added sucrose, what about other sweetening agents? Fructose? Glucose? Corn Syrups? What are classified as ‘pure’ fruit juices?  How will sugars in these products be measured?

There are more questions than answers at this early stage, and with consultation in the summer we’ll be watching closely to find out more!

Jamie’s Sugar Rush – Not a rushed response?

SodasSo it’s been a few weeks since Jamie’s launched his battle against sugar , and I’ve been waiting to hear the response and reaction from consumers, manufacturers, legislators, and frankly anyone! Interestingly, even though everyone is talking about in sugars in our foods and drinks, it hasn’t really been the storm I was expecting.

This got me thinking, whilst it is certainly a good idea to tackle how much sugar we all eat and drink, as Jamie showed the dental and general health implications could be huge. This in turn could reduce the strain on the NHS and have wider reaching benefits. Whilst his campaign message is undoubtedly very well intended, I have a few questions on his approach.

Firstly, would a 10p increase in drinks costing £2.45 in his restaurants really dissuade anyone from ordering a drink with added sugar, particularly when you consider other restaurants charge around £2.50 anyway?  I realise this is just the start to his tax proposition however, other restaurants have appeared to be slow or reluctant to follow his lead, which is intriguing.

Whilst he backed up his manifesto with the observed reduction in fizzy drink consumption in Mexico following a one peso drinks tax, can we really compare these very different nations and use the same the approach to very different social status and sugar intake problems?  He hardly mentioned the early stage results of the Mexican findings, nor discussed the difficulties observed during the introduction of France’s soft drink tax, which showed a far lower level of impact over a longer period of time, and is a nation with a closer socio-economic structure to the UK.

The final queries I have from Jamie’s sugar rush, were when Jamie outlined how much sugar we can easily consume in our diets (without even having fizzy drinks, desserts or sweets).   When discussing a typical daily diet, Jamie found we could easily consume over five times the recommended level of sugar without a fizzy drink in sight, fundamentally questioning the point of focusing on a single food offering, rather than recommending balance and moderation.  This got me thinking, if sugar is in a wide range of our foods and drinks already, what are the food and drinks industry doing to align with government recommendations?  Are they doing anything to reduce sugar in their products already?

The food and drinks industry aren’t just standing idly by and increasing the sugar levels in their products, many of them are constantly striving to reduce sugar contents right under our noses!  Using a small step reduction approach, which takes a small amount of sugar out of the product so that consumers won’t notice, they then wait until everyone has adjusted to the new sweetness level and do it again.  This method has been used on reducing salt and sugar in products for years, however it does take time.  Larger scale jumps can lead to consumers noticing a large difference and rejecting of the product (even if claimed on the label), which can severely damage consumer enjoyment, the product and even perception of the brand too.  All of these are heavy costs to the food and drinks industry, and they are determined to products that taste good and consumers will like.

Alternatively, sweetening agents such as aspartame, sucralose and more recently stevia have also been included into products.  These deliver sweetness without the diabetes and tooth decay issues associated with sugar, and are commonly used in diet drinks and as table top sweeteners.  However, consumer perceptions of sweeteners are mixed, with some feeling these aren’t a natural source of sweetness and opting for sugar and honey alternatives, whilst others find these an option for low-calorie enjoyment of sweet products.

Jamie’s sugar rush has highlighted a key debate in the production of our foods and drinks, and the need to strike a balance between great tasting products and healthy lifestyle.  I’m sure this debate will continue for the foreseeable future, and maybe Jamie’s efforts will be a slow burning reminder for the food and drinks industry to keep sugar near the top of their priorities.