Tax on soft drinks is sweet (The Australian)

Tuesday 22 May, 2018
by Jane Martin

Coca-Cola Amatil’s fierce opposition to a health levy to increase the price of sugary drinks is not surprising; it’s our largest manufacturer of the product.

Australians should not be taken in by the arguments of Coca-Cola Amatil’s group managing director, Alison Watkins. Coca-Cola is not in the business of health. It is in the business of selling drinks, and its job is to return a profit to shareholders by selling a lot of these — mostly sugary — drinks.

The World Health Organisation has identified added sugar as a serious health problem and, as such, supports a levy on sugary drinks to improve diets and address obesity. More than 26 countries have acted on this advice, and we’re starting to see evidence that the strategy works.

In Mexico, a 10 per cent increase in price resulted in a 7.6 per cent decrease in consumption overall, with even greater gains in low-income groups. In Berkeley, California, a year after the tax came in, sugary drink sales decreased 9.6 per cent. People in both jurisdictions also bought more water.

It is unrealistic to expect to see a drop in obesity rates so soon after implementation; it takes much longer to see a measurable impact on population weight. Rates of overweight and obesity have been increasing steadily in Australia for more than 30 years, the same period in which we have been eating and drinking more processed foods and adopting sedentary lifestyles. Addressing this is like turning around an ocean liner; the ship must be slowed first.

The first step is to improve diets, so the fact we see measurable reductions in sugary drink consumption after these price increases is a mark of early success. Changes in rates of obesity should be a long-term, but not the only, goal. By cutting back on sugar in our diets we would see many other health benefits, such as reduced risk of type 2 diabetes and other chronic diseases, and declines in tooth decay, the most prevalent disease in Australian children.

In Britain, a health levy was introduced to try to reduce the amount of sugar added to drinks. And it did. These initiatives provide funds that then can support families and communities to engage in activities that improve health.

Sugar is a problem in Australia, particularly for teenage boys, with almost three-quarters exceeding the global guidelines for added sugar consumption. And more than half of this sugar is coming from drinks — soft drinks, fruit juice drinks, sports drinks and energy drinks.

Australia’s dietary guidelines recommend reducing sugary drink consumption because of its contribution to weight gain in adults and children, not to mention the dental issues. These guidelines were developed by the National Health and Medical Research Council, Australia’s peak medical body.

Coca-Cola knows that pricing changes behaviour, which is why it recently has reduced the price of bottled water and iced teas in an effort to revive flagging sales. It’s also why it is vehemently opposed to this health levy.

The company has an unavoidable conflict: it has a legal obligation to act in the interests of shareholders and maximise sales and profits. The beverages industry has a poor record, funding research to obfuscate the evidence, running campaigns with a focus on physical activity (to distract from the issue of consumption) and supporting recommendations that are relatively weak and ineffective as alternatives to stronger action by government.

If Coca-Cola really cared about reducing obesity it would stop marketing to teens, fast-track meaningful reformulation and not put sugary drinks in schools. There’s no doubt the obesity and diabetes epidemics need to be tackled through multiple strategies, and this is where we agree with Watkins: a health levy on sugary drinks is just one element of a comprehensive approach needed to improve diets and curb obesity.