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Sugar Tax effects on marketingMarketing of sugar rich beverages, confectionary and foods is big business, with brands like Coca-Cola, Mondel─ôz and Mars all investing significant sums annually in advertising and promotions. What then would become of those agencies and suppliers benefiting from this, if the sugar tax was to be introduced?

Some might argue that it would potentially lead to marketing budgets being slashed in a bid to lower prices to compensate. However, I suspect that the sugar tax introduction will also come with minimum price setting, thus preventing price promotion and discounting. Couple this with the pressure to maintain their customer base following the tax-driven price increase, I imagine, will inevitably lead these brands to promote more frequently and more aggressively.

If this is truly one of the root causes of obesity in the UK, the government has two possible courses of action to address this problem; taxation or regulation. Regulation being the banning of advertising or promoting of certain food types, the like of which we have seen with tobacco and then more recently, alcohol. The government could even choose to employ both at the same time but so far there has been no confirmation that one will come hand in hand with the other.

Either way, it’s clear regulation would be bad for the marketing world. I remember the affects to the fixed fee promotion's industry when tobacco advertising was regulated, it was huge and we only formed just a small part of the marketing mix. The same is now being felt with the increasing regulation on alcohol, therefore any restriction on another large group of promoters would be extremely damaging.

So aside from the benefits to people's health that the curbing of our intake that this sugar tax could potentially bring about, could it then also be a good news for marketers? If the introduction of the tax prevents or delays regulation, is tax a good thing for once?!

Let's hope then that the rejection of these proposals just means a delay in the introduction of this sugar tax and not a gradual slide towards regulation.

Steve Berry, Managing Director. 16th February 2016

Copyright 2016 EMIRAT Limited. The views expressed in this blog are that of the author only and not necessarily the views of the company. The company, its directors, officers or employees make no representation or accept any liability for its accuracy or completeness unless expressly stated to the contrary.