Friday, 16 December 2016

Understanding the health benefits of the ‘sugar tax’: how will the soft drinks industry respond?

Guest post by Oliver Mytton, Centre for Diet and Activity Research (CEDAR) & MRC Epidemiology Unit, University of Cambridge
Today our paper, a health impact assessment of the government’s proposed ‘sugar tax’ was published in the Lancet Public Health. The government’s proposal, announced in April of this year, took health campaigners by surprise. Not only was it unexpected, but the government’s proposal was unusual.

Other countries, notably Mexico, have introduced a sales or excise tax on sugary drinks. However, the UK government proposed a levy on soft drinks manufacturers or importers based on the volume of sugary drinks sold. There will be two levels of tax, a higher level on drinks with more than 8g per 100ml, and a lower level on drinks with 5g to 8g per 100ml.

With others, I have previously modelled the potential health benefits of a ‘simple’ excise tax on sugary drinks, but the industry levy is more complicated.

Industry levy – how it might work  

The levy might lead to a reduction in sugary drinks consumption through a number of pathways, and from listening to industry experts and reviewing statements made by soft drinks manufacturers, it was apparent that nobody knew quite how the industry would respond.

The nature and magnitude of these responses might lead to very different health outcomes, which is what we describe in our paper. For our health impact assessment, we identified three broad responses that the industry might make:
  1. reformulation (reducing sugar content); 
  2. price rises that pass the cost on to consumers; and
  3. changes in marketing practices to ‘shift’ consumer preferences, e.g. away from high sugar drinks to diet drinks.
For each response, we then identified a ‘best case’ and ‘worst case’ scenario.

Modelled health benefits

From these six scenarios, we were able to estimate changes in consumption of sugary drinks. We then estimated changes in health, using data describing the relationship between sugary drinks consumption and three outcomes (dental caries, type 2 diabetes and obesity).

The most beneficial modelled scenario for health was reformulation (reduction of sugar content by 15% for ‘mid-sugar’ drinks and 30% for ‘high-sugar’ drinks), with an estimate of 140,000 fewer adults and children with obesity; 19,000 fewer incident cases of diabetes each year, and 270,000 fewer decayed, missing, or filled teeth annually in the UK. Important reductions in disease were also associated with the maximum expected price increase (equivalent to half the levy cost being passed onto consumers) and changes in marketing share.

The least beneficial modelled scenario for health was a change in market share that resulted in consumers switching not only from high-sugar drinks, but also from diet drinks, to low sugar drinks. This might result in an (small) increase in consumption of sugary drinks and consequent (small) increase in disease (using the measures we looked at). If the price is passed on to all soft drinks (rather than just sugary drinks) the health benefits were also substantially reduced.

Across the scenarios the most striking finding was the concentration of the health benefits in terms of obesity and dental caries amongst children and younger adults. They are the major consumers of sugary drinks. Diabetes follows a different pattern with many more cases likely to be prevented amongst adults than children, because there are relatively few incident cases of type 2 diabetes among children and young adults.

In doing this, we have not made an overall estimate of the health benefits of the new levy, rather we have identified the benefits attributable to different industry responses to the levy and put upper and lower bounds on those responses.

Policy implications

Consumers appear to be turning away from sugary drinks

Our assessment shows that the health benefits of the levy will be greatly affected by how the industry responds. We have identified scenarios where the health benefit is minimal (or conceivably negative). However, we think this is unlikely: there are strong signs from industry that there will be significant reformulation, consumers appear to be turning away from sugary drinks and most of the scenarios we modelled were beneficial for health.

While we are not as optimistic about reformulation as others, our work does further suggest that reformulation of sugary drinks has potential to mitigate some of the health risks associated with regular consumption of sugary drinks. Reformulation of soft drinks probably has more scope than I previously thought. The government levy may, particularly by using two tiers, be a relatively effective tool to incentivise reformulation.

It also suggests that the industry levy may not be a ‘simple’ intervention. Whilst we have described discrete responses, it is possible that the levy may stimulate several changes. Not just the changes described in our study but others, e.g. changes in consumer attitudes, reductions in portion sizes and introduction of new low sugar products. If it does do this, the government’s approach may be very effective, perhaps more effective than a ‘simple’ excise tax.

On the flipside, it may also be more uncertain or risky as its success depends on how industry responds. This creates a potential role for government and health organisations to apply pressure on industry to respond in ways that improve health. This uncertainty also underscores the need for a careful evaluation that can capture the important industry responses.

Finally, whilst there are reasons to be optimistic and the government should be applauded for this initiative, it does underscore the need for ‘brave and bold’ action across a variety of areas concerned with food and physical activity (which the recent Childhood Obesity Plan failed to deliver) to markedly reduce obesity. As I have written before, this measure alone will not ‘solve’ obesity, but it can be an important step towards improving population health.

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