As countries around the world implement sugar taxes, many food companies face unprecedented pricing pressure and public criticism. For example, in the UK, after the Soft Drinks Industry Levy (SDIL) was introduced in 2018, many popular carbonated and fruit-flavored beverages were placed under a higher tax bracket, resulting in an additional tax of up to 24 pence per liter.
Faced with this reality, companies haven't simply passed the tax burden on to consumers. Instead, they've chosen a more challenging approach: reformulating their products without raising prices. This isn't just a battle for market share but also a technological battle to balance taste, nutrition, and cost.
1. Price Increase or Sugar Reduction? A Strategic Fork in the Road
In the early days of the SDIL, the industry generally predicted a subsequent increase in beverage retail prices. However, data shows that most leading brands haven't opted for an outright price increase-they fear that consumers might switch to competing brands or bottled water.
Coca-Cola Europe and Pacific (CCEP) disclosed in its 2018 financial report that its brands, including Sprite and Fanta, had been moved into lower tax brackets by reducing sugar without adjusting retail prices. "We don't want to lose our appeal to young consumers due to the tax reform," a CCEP product manager stated publicly.
2. Three Paths to Sugar Reduction: Technology + Strategic Synergy
Faced with the pressure of the sugar tax, companies typically adopt the following three strategies:
- Sugar Substitution: Using zero-calorie sugar substitutes such as erythritol and steviol glycosides maintains sweetness while avoiding taxable sugar counts;
- Optimizing the Recipe Structure: Enhancing the taste by enhancing flavor and adding fruit acids, while reducing reliance on sweetness.
- Separate Production Line Strategy: Establishing a "zero-sugar" line (such as Coca-Cola Zero and Pepsi Max) to cater to sugar-conscious consumers while retaining classic versions to retain existing users.
MiniCrush also employs a similar strategy for formula grading in its export-oriented freeze-dried candy project. For example, the "North American export version" uses erythritol as the base sweetener to avoid American consumers' sensitivity to "added sugar," while the "Middle East version" increases the ratio of honey and coconut sugar to adapt to local tastes and halal ingredient requirements.
3. Sugar Reduction Doesn't Mean Sacrificing Taste: Technological Breakthroughs Break the "Bitterness Bottleneck"
Many brands used to steer clear of sugar substitutes, primarily due to their perceived metallic bitterness or delayed sweetness. However, in recent years, with the advancement of flavor modification technologies and sweetness enhancement factors, food companies have gradually overcome the pain point of sugar substitutes' intolerance.
Innocent, a well-known British beverage brand, reduced the sugar content of its 2019 juice products from 10 g/100 ml to 4.5 g, while also adding trace amounts of citric acid and pectin to enhance the overall flavor. Consumer feedback remains positive.
The R&D director of MiniCrush noted that when using sugar substitutes in freeze-dried candies, adjustments to the vacuum drying curve and colloidal stabilizer ratio are often necessary to prevent dehydration and cracking or loss of sweetness.
4. New Brand Opportunities: The "Sugar-Free Perception" Emerges as a Growth Point
It is worth noting that sugar taxes present not only challenges but also new opportunities.
According to data released by Kantar, consumption of low-sugar/sugar-free beverages in the UK increased by 36% year-on-year after the tax was implemented in 2018. Consumers are actively seeking "no added sugar" and "zero sugar" alternatives and are willing to pay a premium for them.
This trend inspired MiniCrush to adjust its brand strategy:
- Developing dual labeling for its entire product line, including "low sugar claim" and "source of sweetness";
- Launching "low-sugar gift boxes" and "sugar-reducing casual wear" for the export market;
- Collaborating with nutrition influencers to launch a series of "label reading" content to guide consumers' understanding of sugar substitutes, sugar reduction, and formulation technologies.
5. After the Sugar Tax: How can companies achieve long-term sugar control?
The sugar tax is just the starting point; the real challenge lies in transforming "sugar reduction" into a sustainable brand advantage.
To address this, MiniCrush has proposed three long-term strategies:
- Regularize recipe innovation: Set annual sugar reduction targets, introduce flavor science, and incorporate ingredient substitution mechanisms.
- Globalize labeling compliance: Build a sugar labeling system suitable for all export markets, aligning with FDA, EU FIC, GCC GSO, and other regulations;
- Supplier collaboration reform: Establish long-term partnerships with sweetener suppliers to target the next generation of natural sugar substitutes.
In this "sugar control" storm, the ultimate success of companies will not depend on whether they can resist tariffs, but on whether they can maintain taste while becoming the next generation of healthy food.
