Government warned against taxing fizzy drinks ahead of UK

Britvic Ireland chief says Irish firms could be hit by cross-Border ‘grey trade’ as result

A sugar tax here before the UK “would be something that the whole industry would be concerned about,” Britvic Ireland chief executive Kevin Donnelly told the Irish Times Business podcast. Photograph: Getty Images/iStockphoto

A sugar tax here before the UK “would be something that the whole industry would be concerned about,” Britvic Ireland chief executive Kevin Donnelly told the Irish Times Business podcast. Photograph: Getty Images/iStockphoto

 

The Government should not introduce a tax on fizzy drinks until a similar tax is already in place in the United Kingdom, as to do so would encourage cross-Border “grey trade” at the expense of Irish companies, according to a leading Irish beverage producer.

A sugar tax here before the UK “would be something that the whole industry would be concerned about,” Britvic Ireland chief executive Kevin Donnelly told the Irish Times Business podcast.

Weak sterling and the introduction of a sugar tax in the Republic of Ireland before Northern Ireland “would drive quite a wedge in pricing between the two parts of Ireland,” he said.

UK tax

The UK tax, due to come in in 2018, will be levied on volumes of drinks produced or imported. Here in Ireland a tax on “sugar-sweetened” drinks is contained in the programme for government, but no date has been set for its introduction and the mechanism is not specified.

Mr Donnelly pointed to the experience of Denmark, where he said a sugar tax “was taken back by the government after one year, because it cost cross-border trade”.

Business Podcast

Denmark dropped its tax on sugary drinks this year, which had in fact been in place since the 1930s. However a tax on fatty foods was dropped after one year, with Danish businesses blaming both taxes for reduced competitiveness.

Supporting the introduction of such a tax as Minster for Health, Leo Varadkar said a 20 per cent tax on sweetened drinks would result in a 1.25 per cent reduction in obesity, or about 10,000 fewer obese adults.

Mexican example

But Mr Donnelly questioned the effectiveness of a sugar tax in reducing obesity levels, citing the example of Mexico where a sugar tax was introduced in 2014.

“If you actually look at how many calories have been taken out of the Mexican diet as a result, it’s tiny compared to the collective impact of reformulation by the soft drinks industry in Mexico,” he said.

“Ultimately obesity has many many causes but at the heart of it is an equation, where calories in are not matched by calories out. So it takes the whole of society to be involved”.

Britvic has made a voluntary commitment to reduce by 20 per cent the average number of calories of its products by 2020, he said.

Mr Donnelly also spoke about Britvic Ireland brand Ballygowan’s “hydration partner” status with Dublin GAA, while it has also just signed deals with the Cork, Kerry, Kildare and Limerick.

“It has been very, very fruitful, the Dubs are flying. But actually there’s a message in there too, that we’re encouraging people to lead a more active lifestyle, back to the obesity point about calories in, calories out,” he said.

“What you’re doing is buying into someone else equity, and what the GAA stands for is local, is family, is active lifestyles. They’re all of the things Ballygowan would stand for.”