Obesity surge drives debate on sugar and other sin taxes

“Sugar, rum and tobacco,” Scottish moral philosopher and economist Adam Smith once wrote, “are commodities which are nowhere necessaries of life, which have become objects of almost universal consumption, and which are, therefore, extremely popular subjects of taxation.”

Two and a half centuries on, most countries impose some sort of levy on alcohol and tobacco. With surging obesity levels putting increasing strain on public health systems, governments around the world have begun to toy with the idea of taxing sugar as well.

It is not hard to see why public health officials are fretting. According to estimates from the World Health Organisation, more than 1.9bn adults were overweight in 2014 and, of these, more than 600m suffered from obesity — which is linked to some cancers, cardiovascular disease and type 2 diabetes. McKinsey, the consultancy, puts the annual economic cost of obesity at about $2tn, or 2.8 per cent of global output.

Such stark figures have begun to jolt governments into action. Mexico slapped a 10 per cent tax on sugary drinks in 2014, while a number of European countries, including Finland, France, Hungary and Denmark have introduced health-related levies of their own. In the UK, the British Medical Association has called for a 20 per cent tax on sugary drinks.

Whether or not such taxes work is a matter of debate. A preliminary review of Mexico’s levy found a fall in purchases of taxed drinks as well as a rise in sales of untaxed and healthier drinks, mainly driven by increased sales of bottled water. By contrast, a Danish surcharge on foods high in saturated fats was ditched a year after its introduction in 2011, amid claims consumers were avoiding it by popping across the border to Germany to satiate their desire for cheaper, fattier fare.

The food industry has, in general, been firmly opposed to such direct government intervention. Nonetheless, the renewed focus on waistlines means that industry groups are under pressure to demonstrate their products are healthy as well as tasty.

Over the past three decades, the industry has made some efforts to improve the quality of its offerings. Heinz, for example, has reduced the amount of sugar in a variety of its products ranging from baked beans to spaghetti hoops, while Nestlé overhauls a third of its range every three years looking for ways to make them healthier. Drink manufacturers such as Coca-Cola and Pepsi have cut the amount of sugar in some of their beverages.

I think there is a bright future for the food industry. But to survive, companies will definitely have to adapt

Many of the reductions over the past 30 years have been achieved in one of two ways: either by reducing the amount of sugar, salt or fat in a product, or by finding an alternative ingredient — such as using sweeteners to replace sugar. More recently, however, some companies have been investing money in a more ambitious undertaking: learning how to adjust the fundamental make-up of the food they sell.

Stefan Catsicas, chief technology officer at Nestlé since 2013, says that the Swiss-listed group is working on ways to change the physical composition of some of its food products so that, for example, they could have salt on the outside, but none on the inside. This would allow Nestlé to dramatically reduce the salt content of its products without changing the taste.

“What I want to do is get away from the percentage point by percentage point change that we have seen in the past, [and move towards] the type of game changing innovations that allow to you reduce the salt content of, say, a pizza, by 20 or even 40 per cent,” Mr Catsicas says. “I think there is a bright future for the food industry. But to survive, companies will definitely have to adapt.”

Jack Winkler, emeritus professor of nutrition policy at London Metropolitan University, says that this kind of reformulation of products may offer the best chance of reducing the amount of sugar, salt and fats in diets in the long term, since education campaigns have largely failed and the efficacy of food taxes is unproven.

You can’t make companies cut too fast or consumers will ditch their products and go elsewhere

Not all food companies can afford to devote large resources to material science, but Prof Winkler says that the success of the UK’s salt reduction programme, which cut the average Briton’s salt intake by 15 per cent in six years, is proof that companies can be encouraged to act if the right parameters are in place. “The key with such schemes is that they need to be incremental, imperceptible and invisible,” he says.

“You can’t make companies cut too fast or consumers will ditch their products and go elsewhere. There are two challenges for a company to reducing the sugar or salt in its products. The first is technical: can we do it? The second is commercial: will anyone still buy it?”

While reformulating recipes is one way to improve public health, it should be part of a multi-pronged approach, says Oliver Mytton from the Centre for Diet and Activity Research in Cambridge.

“The key is to remember that there is not just one solution,” he says. “To deal with obesity a mixture of approaches — including reformulation, taxation and adjusting portion sizes — will be needed. There is no silver bullet.”