The sugar tax presents a massive opportunity for entrepreneurs

Inventors who can find a healthy way to tickle consumer taste buds will be richly rewarded - if Coca-Cola doesn't get there first.

by Jack Torrance
Last Updated: 15 Jul 2016

The sugar tax announced in George Osborne’s last ever Budget was decried by the main players in the drinks industry. Shares in Britvic and the Irn-Bru maker AG Barr tumbled on the news and the industry association was outraged. 

But assuming Osborne's successor Philip Hammond doesn't heed industry calls to scrap it then the measure also presents an opportunity for a new breed of drinks business. While the soft drinks market has been exceptionally crowded for some time now, the tax will give consumers reason to rethink their choice of pop and go in search of something healthier.

The plan is for there to be two bands, for drinks with 5-8g per 100ml and for those with more than 8g. The exact levies haven't been announced, though the OBR expects them to be between 18p and 24p per litre. 

On that basis, most fruit juices would exceed the sugar thresholds the tax will apply to, but they are specifically  exempt. That’s good news for John Carey, founder of Cherry Active. The former finance worker started the company after developing gout, a painful arthritis that mainly affects the toes. On a business trip to the US he discovered that montmorency cherries were a natural remedy used to relieve the condition. 

After returning home he called up the farmer who had introduced him to them and started importing them to make Cherry Active, which comes as juice concentrate. As well as helping with gout, the cherries are high in antioxidants and the company sells its juice to various sports teams, including four of those that competed in last year’s Rugby World Cup. ‘It has become a health tonic for lots of different diverse groups of consumers,’ says Carey. The company has since started selling beet and blueberry juices, employs a team of 8 and has listings with 2,000 health stores including Holland & Barrett.

‘What we’re all about is having a premium product made from fruit and vegetables that have got a proven functional benefit,’ he adds. ‘There’s a huge market developing for functional drinks that have got not just hearsay, or ‘this is what celebrities are taking now’ but what’s actually been proven and properly researched.’

Carey thinks that the sugar tax is a good development. ‘A lot of people are drinking colas and other sugary drinks that have no nutrients...which is fuelling the obesity epidemic,’ he says. ‘Something needs to be done.’

Less enthusiastic about the measure is Nicole Vaughan, founder of Sweet Sally Tea. ‘I don’t think it’s going to work,’ she says. ‘I think it’s going to tax the wrong individual and at the end of the day we need a campaign about education and choice.’

Vaughan’s brand makes ‘Craft Iced Tea’ in the style of her native Mississippi. She launched the company after moving to London and struggling to find iced tea that measured up to what she was used to at home. ‘I went out and started looking to see what the market looked like and there wasn’t anything in terms of my definition of icea tea, being freshly brewed and lightly sweetened, all-natural.’

Though she admits the sugar tax will likely be a good thing for her company (Sweet Sally contains a relatively moderate 4g of sugar per 100ml, below the threshold), Vaughan doesn’t think it will be good for the nation’s health. ‘What it’s doing is driving manufacturers to reformulate their products by using artificial sweeteners.’ Synthetic chemicals like aspartame and sucralose remain controversial – while they certainly don’t have the calories of proper sugar, it has been suggested they can still cause diabetes. Vaughn thinks it’s better that people consumer smaller amounts of normal sugar instead.

But is it possible to cut out sugar and sweeteners almost altogether? Clara Vaiss, who co-founded Sibberi with Medhi Megzhifene, thinks she’s found a drink that ticks all the boxes. The company sells ‘tree water’, sap that has been drained out of birch, maple and bamboo trees.

The pair came across the unusual drink when in conversation with a model friend, who said her fellow models were eschewing the more sugary coconut water for tree water. ‘We couldn’t find any in the UK at the time, so we decided to fly to Latvia to find the sap,’ she says. ‘It was really delicious and we realised we had a drink that tasted good, had hardly any sugar and had lots of health benefits.’

Vaiss says the flavour of the drinks is difficult to describe and having hunted down all three varieties, MT concurs. The birch water tasted very subtly sweet, the maple one has hints of maple syrup (surprise, surprise) and the bamboo one is comparable with cold tea. They weren’t exceptionally tasty but given they all contain barely any calories per bottle and no artificial sweeteners, it’s not hard to see how they might catch on.

In such a crowded market, chances are that neither of these companies will go on to be the next Coca-Cola. But as the sugar tax makes consumers think again about what they’re glugging, there’s a big opportunity for some drinks companies to make a big success of things.

Image credit: Lauri Andler/Wikimedia


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