Soft Drinks Tax 2018 the Impact and the Opportunity

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1 Soft Drinks Tax 2018 the Impact and the Opportunity 1

2 Jean Pattison is the West European Regional Research Manager for Canadean Richard Corbett is a Freelance Researcher for Canadean Commentator for Just Drinks Soft Drinks International 2

Obesity is getting more widespread and in March this year the former Chancellor announced that there will be a sugar tax on soft drinks in 2018 The

3 Obesity is getting more widespread and in March this year the former Chancellor announced that there will be a sugar tax on soft drinks in 2018 The tax will have two bands - one for total sugar content above five grams per 10cl and a second, higher band for drinks with more than eight grams per 10cl 3

4 Firstly Share Prices Take a Hit Even Tate and Lyle shares dropped before traders realised they had sold their sugar business in 2009 Brexit had more impact 4

5 Learning from Experience The UK is not the only West European market to have introduced a soft drinks Tax; Denmark France Finland Norway 5

6 Impact on Prices +8-12% +6% +14% 6

7 Volume losses Carbonates Growth Index Denmark France Danish first year losses down 7% in 2001 and 1% in 2002 French Losses between 4 and 5% 7

8 UK Consumption will Fall Based on Denmark and France; - between 7 and 12% 350m and 600m litres of carbonates alone People were already drinking less 6000 UK Carbonates

Other Categories Hit Per Capita 20 15 10 5 West Europe Denmark 0 Juice Nectars Still Drinks

9 Other Categories Hit Per Capita West Europe Denmark 0 Juice Nectars Still Drinks Flavoured Milk The tax has stunted the development of still drinks and nectars in Denmark 9

. Many school lunchbox brands have already adapted to get back in Tesco s A paper in the

10 Chance for Juices and Milk based Drinks The tax should be an opportunity for Juice and dairy drinks but.. Many school lunchbox brands have already adapted to get back in Tesco s A paper in the medical journal has already called for juices to be taxed as well Milk based drinks are excluded Arla to triple their beverage business by 2020 but look out for Jamie Oliver 10

11 Private Label Loses Out Brands have more scope for price cutting Brands are better represented in the lower calorie segment 125 France growth Index Private Label Branded 11

12 Price Pointing Inevitably we will see more 15cl and 25cl cans and fewer 33cl cans and 50cl cans More 100cl and 125cl PET bottles 20cl Glass bottles instead of 33cl in HORECA More Ice in McDonalds! More price pointing in can multipacks 12

13 Low Calorie Opportunities We can expect a surge in product reformulation. We have already seen Coke Life shed more calories For many products this process had already begun in order to get listed by Tesco A catalyst for new stevia products Considerable marketing focus for Zero products 13

Flavoured Waters Many companies predict a migration to flavoured

flavoured waters to exploit the concerns over aspartame In the

water brands do not have the stigma of carbonates brands Halo

14 Flavoured Waters Many companies predict a migration to flavoured Waters Nestle and Danone in the States have positioned their flavoured waters to exploit the concerns over aspartame In the States Flavoured water volumes jumped by 12% last year Flavoured water brands do not have the stigma of carbonates brands Halo effect Many Swedes drink flavoured waters as a substitute for carbonates 14

It will be an easy target for future budgets just like alcohol duty It

15 Legacy The tax is here to stay It will raise 520m hard to replace It will go up. It will be an easy target for future budgets just like alcohol duty It will have a limited impact on obesity. More cultural changes will be needed The market will settle down to its previous level of decline 15

16 Good News Story Soft drinks are increasingly portrayed as the villain but there are many products that have a very positive impact on day to day lives. These cannot of course be Corroborated but an internet search suggests Pomegranate's antioxidant capacity provides protection against heart disease, cancer and cognitive impairment. It even slows ageing! Beetroot juice boosts brain power, cleanses your liver and cuts the risk of heart disease and strokes Cranberry and grapefruit reduce cholesterol. Cranberry juice is even good for your dental hygiene Coconut water low calorie natural sports drink with plenty of electrolytes 16

fat loss and lowers the risk of cancer Ginger cures nausea and reduces muscle pain and soreness.

17 Cherry juice helps treat gout, aids sleep, weight loss and Alzheimer s Blueberry juice is full of antioxidants, helps against ageing, cancer and can help your memory Drinking a cup of apple juice means taking 10 different types of vitamins at a time Green tea improves brain function, fat loss and lowers the risk of cancer Ginger cures nausea and reduces muscle pain and soreness. It is good for digestion Aloe Vera encourages hair growth and is good for skin. It also supports the immune system The list goes on and on!!! We should also be talking about the good news! 17

18 Thank you 18

THIRSTY ASIA A MARKET ANALYSIS. Presentation by Richard Hall Chairman, Zenith International Ltd. AUSDRINKS 21 March 2016, Sydney

THIRSTY ASIA A MARKET ANALYSIS Presentation by Richard Hall Chairman, Zenith International Ltd AUSDRINKS 21 March 2016, Sydney Contents Global drinks consumption 1-2 Global drinks markets 3-4 Global drinks