Coca Cola Increases Its Prices Ahead Of Sugar Tax

As fizzy drinks manufacturers in the UK prepare for the sugar tax to be introduced in April, Coca Cola has announced that it has scrapped its plans to alter its famous high sugar recipe. As an alternative, the company has released its new plans of using smaller bottles along with charging consumers higher prices for its drinks.

The new plans will see the price of a 1.75 litre bottle Coke increase by 20p to £1.99, whilst the size of the bottle will shrink to just 1.5 litres. The price of a 500ml bottle, which is currently £1.09, will also increase to £1.25 resulting in a 25% price increase in just 6 months.

The sugar tax was announced by George Obsborne in an attempt to tackle the obesity problem in the UK. The tax is due to be introduced in April and required manufacturers to pay tax of 18p per litre on drinks containing 5g of sugar per 100ml and 24p per litre if they contain over 8g of sugar. This would mean that, as Coca Cola contains 10.6g of sugar per 100ml, it could be subject to a tax of 24p per litre.

“We have no plans to change the recipe of Coca-Cola Classic so it will be impacted by the government’s soft drinks tax,” said a spokesman for Coca-Cola European Partners, which is the bottler for Coca-Cola products in western Europe. “People love the taste … and have told us not to change.” He added that “Coca-Cola Zero Sugar and Diet Coke, our no-sugar colas, are not impacted.”

Coca Cola has already reduced the amount sugar in other drinks it owns, including Sprite, Fanta and Dr Pepper. The new version of Fanta was introduced last year, and contains 33% less sugar than the original.  Coca-Cola has also said that it is taking part in discussions with retailers over the upcoming tax. A spokesperson said “These discussions include reviewing the pack sizes offered to consumers and our approach to price-marked packs.”

Another manufacturer AG Barr, who produce the drink Irn Bru, have also revealed that it plans to alter the recipe of the famous Scottish drink to try and avoid the tax. However, this has been met with criticism among consumers who have launched a petition “Hands off our Irn Bru” which now has thousands of signatures. Ryan Allen, a 27-year-old joiner from Ayr who started the petition said  “I don’t want Irn Bru as we know it to end. I don’t think people who don’t drink Irn Bru or aren’t from Scotland understand how we feel about it. It’s a national treasure.”

Duncan Brewer, a partner at consultancy firm Oliver Wyman, said “I’m not surprised Coke is reluctant to reformulate given the ‘new Coke’ debacle. But they also have the negotiating power to pass the price rise on to retailers. I’m pretty sure they won’t eat the cost of the tax themselves. A.G Barr is a smaller player so less able to do so, so has had to take this riskier move.”

Tim Rycroft, of the Food and Drink Federation, added that a tax on sugar was not “the right mechanism”. He commented that “If you put a tax on something, you will reduce consumption in terms of purchase. The question is, will you reduce consumption in terms of calories? Will those people who might choose not to buy a drink that goes up in price forego those calories, or will they find them somewhere else? Trying to tackle obesity through these very narrow interventions seems to me to be not the right way to do it.”