Analysis - CSD producers face threat of more anti-obesity taxes
CSD producers are facing increasing pressure over anti-obesity concerns
Soft drinks producers must increase their efforts to promote low-calorie options to avoid a “rising tide” of global anti-obesity taxation, according to an analyst.
In a note today (4 December), analysts CLSA warned that the sugar tax introduced in Mexico last month could encourage other regions to follow suit. “If the sugar tax does lower consumption rates - thus helping to reduce obesity - and doesn’t significantly hurt the government, other countries may be inclined to follow Mexico’s lead as well as certain states in the US,” the analysts said.
The note added: “Coca-Cola and its peers are clearly at risk from a rising tide of anti-obesity taxation ... we believe the soft drinks industry may step up efforts to self-regulate by promoting its non-CSD and low-calorie portfolios to a greater degree than CSDs.”
France increased VAT on soft drinks last year, but New York City has so far been unsuccessful in its attempts to ban the sale of large sugary soft beverages.
On Coca-Cola specifically, CLSA said the best way for it to deal with such external factors is through product innovation and “premiumising” its highest volume brands. “Coke has no option but to innovate away from its core CSDs and needs to drive towards premium innovation, while also finding a way to sell its core brands at higher prices,” the note said.
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