Manufacturers within the sector will now be “motivated” to tighten up processes at every part of the supply chain, leading to increased innovation to cut costs, Fair told Works Management. He also believes it could lead to firms bringing brand new drinks to market.
“People see this coming round the corner and the number of things are happening,” he said. “They’re reinvigorating their R&D processes to work on new products to shore up what potential reduction in demand there might be for the sugary products.”
This may lead to the further acceleration of flavoured water products, according to Fair.
“If people see a sugary drink that’s £1.20 or the flavoured water that’s £1 they’re likely to go for the latter,” he added.
The Sugar Tax will be imposed on manufacturers from 2018, and the government will impose varying levels of taxation on selling drinks with 5g and 8g per 100ml. The added costs will lead to all companies in the sector looking at their in-house production processes and, just as importantly, the relationship with their supplier, says Fair.
“What tends to happen is they’ll dial in the new processes first to one plant and then roll it out to the others, so that you start off with islands of quality and then that spreads,” he said. “But it doesn’t matter how good the quality of my production is if I’m then not able to package it properly, leading to scrapping and re-work. So that’s an area they’ll really be looking to tighten up for big financial savings.”
