Junk food taxes are on the horizon

Foodservice companies should prepare for more intervention on market pricing as the government looks to bring obesity under control. Taxes on unhealthy foods like burgers and pizzas could put some operators out of business and “create huge growth for others”.

The warning comes from David Read, chairman of Prestige Purchasing. He believes that a “new strategy is emerging” from Westminster – years of nutrition policy confined to guidance and labelling strategies is giving way to legislation and taxation to increase the pricing of unhealthy products.

The sugar tax on soft drinks and minimum pricing for alcohol (in Scotland) could be just the start, he noted in the company’s 2017 food and drink inflation report.

“If/when these are successful in driving down consumption of unhealthy foods (Coca Cola have reformulated an entire range and indicated that only Coke Classic will incur sugar tax) we can expect [the government] to pursue other products with a similar plan. In the firing line will almost certainly be burgers, fries, pizza, sandwiches and crisps to name but a few.”

This will spell bad news for some businesses but others will thrive, Read added. “The intention will be to regulate consumption by intervening in market pricing. To be successful it will need to make unhealthy products less attractive than healthy ones. At best this will mean some dramatic changes to ranging in our sector. At its most extreme it could put some operators out of business, and create huge growth for others.”

Prestige also reported that food and drink inflation in foodservice has peaked. The drop in value of the pound has driven up prices, with inflation reaching 9.3% in August. Year-on-year it was 5.8%.

However, come the end of 2018 the sector will be looking at a rate of 3.4% year-on-year, Prestige noted in the report produced with CGA.

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