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Drive Innovation January 19, 2016

Sugar Debate Getting Sticky: Industry Responds to Sugar Measures

Partner, Health & Life Sciences, Oliver Wyman
Key Takeaway
Cross-industry #sugar solutions: Do taxes have role? Should restrictions be placed on advertising? #WEF16 #OWHealth

Sugar is big news right now, generating headlines on both sides of the Atlantic. In recent weeks, governments in the United States and United Kingdom launched efforts to reduce sugar consumption and improve diets. Just yesterday, the NHS announced it would propose a tax on sugary drinks and foods sold in NHS cafes, and the debate over what role government and industry can play in lowering sugar intake is heating up. This week Oliver Wyman is hosting "Sugar, Obesity and Diabetes – The Other Global Food Crisis," a panel discussion to be held at the World Economic Forum annual meeting in Davos, Switzerland. The event will bring together government leaders, health officials, and representatives from the retail and food industries for a discussion on cross-industry measures and solutions. As a lead-up to this timely event, we present an analysis of recent sugar news and developments, including industry response:

Stateside: New guidelines spur industry reaction

In the United States, new dietary guidelines (released January 7) call for a reduction in individuals’ sugar consumption. The guidelines, which are revised every five years by the USDA and the U.S. Department of Health and Human Services, suggest people limit added sugars to no more than 10 percent of daily calories.

The leading source of added sugars is sugar-sweetened beverages, and the U.S. sugar and beverage industries were quick to respond to the guidelines. The Sugar Association stated: “The Committee’s conclusions on ‘added sugars’ intake are not based on the established evidence-based review process of the full body of science, which raises serious concerns the Committee bypassed this process and hand-picked science to support their pre-determined conclusions. Such an approach suggests that these conclusions were ‘opinion-based’ and not ‘science-based.’”

The American Beverage Association (the ABA) released a statement that didn’t object to the guidelines, but indicated consumers should be free to make their own choices. “We fully support the goal to help Americans achieve and maintain a healthy weight,” the statement read. “America’s beverage companies are doing their part to help people manage their calorie and sugar intake by providing a wide range of beverage choices, a variety of package sizes and clear, easy-to-read calorie information – on package and at point of purchase – to help them make the choice that's right for them.”

In the UK, “sugar tax” is back on the table

Last autumn, a Public Health England Report suggested that a 20 percent sugar tax could help Britain curb its sugar consumption. Prime Minister Cameron dismissed the possibility, stating he would not introduce a sugar tax. But on January 7, he indicated a possible change of course and called on industry to come up with a plan to combat the obesity epidemic, or face the possibility sugar tax. (Read Cameron’s comments in The Independent.)

On January 18, NHS Chief Executive Simon Stevens told the Guardian newspaper he was proposing a 20 percent tax on all sugary drinks and foods in NHS cafes.

The beverage industry, not surprisingly, opposes such regulatory measures. The British Soft Drinks Association is on record stating: “There is no evidence that food taxes have an effect on obesity.” The ABA, meanwhile, holds the position that “government regulations won’t make people healthy; only diet, exercise and nutrition education can do that.”

The ABA also contends that such taxes have a negative economic impact on the poor and little effect on obesity rates. In Mexico, which has had a 1 peso per-liter tax on sugar-sweetened drinks since 2014, 63.7 percent of the tax collected came from low socioeconomic status families; and low-income families living in poverty paid 37.5 percent of the total tax collected, according to ABA. (Read more from the ABA.)

Label debate

New food labels that explain the amount of added sugars in food and drinks is another measure under debate in both the United States and Britain. Currently, neither European, British or U.S. law requires companies to distinguish between naturally occurring sugar (found in fruit, vegetables and dairy) and added sugars in a product—the way the amount of saturated fat is spelled out on food labels. But last year, the U.S. Food and Drug Administration proposed changing nutrition labels to include the amount of added sugars and percent of daily recommended allowance per serving.

The food and beverage industry objected, and the FDA received nearly 290,000 comments on the plan, including many from major food companies and trade associations. "Consumers already have the information they need to make healthy dietary choices," the Dairy Institute of California wrote in lengthy objections to the administration's plan. (Read more about industry opposition to new labels in this LA Times article.)

Candy maker Mars, however, came out in support of new labeling, stating: “One of the most important ways we can help is by giving consumers clear information about what’s in the products we manufacture so they can make informed dietary choices. To make it easier for people to track the amount of added sugars in their diet, Mars is declaring its full support for the U.S. government proposal to include an ‘added sugars’ declaration in the Nutrition Facts Panel on packaging.”

New recipes

Beyond regulated changes, the food and beverage industry points to progress it has made on a voluntary basis, such as reformulating products to lower sugar content. Examples of industry reformulation include:

  • Mars pledging to limit single chocolate to 250 calories or less
  • Asda reducing sugar in its condiments and table sauce
  • Coca Cola reducing the calories in Sprite by 30% and introducing a 250ml can of Coca Cola containing 105kcal

And last year supermarket giant Tesco announced it will reduce added sugars in its own-label soft drinks by 5 percent per year. After five years, about two teaspoons of sugar will be cut from a soda.

This sort of gradual reformulation could have a big impact on people’s diet and health. On January 6, an article published in the online version of The Lancet Diabetes & Endocrinology reported that gradually reducing the free sugars in sugar-sweetened beverages could decrease the number of overweight adults in Great Britain by 500,000 and the number of obese adults by 1 million, helping about 300,000 people avoid developing type 2 diabetes.

Timely discussion

On January 20, the Oliver Wyman-hosted Davos discussion will bring together representatives from the health, food, retail and government sectors for discussion on this topic. The event will explore what measures have worked to date, and where future efforts should be focused. Some of the cross-industry solutions to be explored include:

  • Do sugar taxes have a role?
  • Should restrictions be placed on food and drink advertising?
  • What other effective regulatory interventions are there?
  • How best to stimulate awareness in the population?
  • What role can the food and retail industries play?
  • What role can the healthcare and pharmaceutical industries play?

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