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Coca-Cola to sell smaller bottles at higher prices in response to sugar tax

Coca-Cola to sell smaller bottles at higher prices in response to sugar tax

By Zoe Wood

Soft drink manufacturer refuses to alter recipe, as rivals face backlash over reduced sugar Irn-Bru in Scotland

Coca-Cola is to use smaller bottles and sell at higher prices rather than alter its famous sugar-laden secret recipe, while Irn-Bru faces a growing consumer backlash over fears a new lower sugar version will ruin Scotland’s national soft drink.

The changes are part of the preparations underway in the fizzy drinks business for the sugar tax. The cost of some “price marked packs” of Coca-Cola sold in newsagents and convenience stores will increase by more than 10% in March, just before the new tax comes into effect the following month.

The plans will see a 1.75 litre bottle of Coke shrink to 1.5 litres and at the same time increase in price by 20p to £1.99. The price of a 500ml bottle is also increasing, from £1.09 to £1.25. The new price means the cost of a half-litre bottle will have soared 25% in a matter of months, as they were just £1 until last autumn.

“We have no plans to change the recipe of Coca-Cola Classic so it will be impacted by the government’s soft drinks tax,” said a spokesman for Coca-Cola European Partners, which is the bottler for Coca-Cola products in western Europe. “People love the taste ... and have told us not to change.”

AG Barr, the makers of Irn-Bru, have taken the opposite decision and next week will start bottling a new version of the drink which outsells Coke and Pepsi in Scotland and famously claimed to be “made in Scotland from girders”.

The recipe contains half as much sugar due to the introduction of low calorie sweeteners, including aspartame. But loyalists are not happy. Irn-Bru fans are reported to be stockpiling the drink, which dates back 117 years and many use as a hangover cure. At the same time a “Hands off our Irn Bru” petition, started by Ryan Allen, a 27-year-old joiner from Ayr, has pulled in close to 27,000 signatures in a week.

“I don’t want Irn Bru as we know it to end,” Allen told the Guardian. “I don’t think people who don’t drink Irn Bru or aren’t from Scotland understand how we feel about it. It’s a national treasure.”

The sugar tax – designed to help combat child obesity – was announced by then chancellor George Osborne in 2016 and he gave drinks-makers time to change their recipes if they wished to escape the levy. From April soft drinks manufacturers will be taxed at 18p per litre on drinks containing 5g of sugar or more per 100ml, or 24p per litre if the drink has 8g of sugar or more per 100ml. The tax will apply to one in five drinks sold in the UK.

Before Christmas there were calls for local councils and shopping centres to ban visits from Coca-Cola’s promotional Christmas trucks because of sugar’s role in rotting children’s teeth and making them fat. Coca-Cola Classic, which contains 10.6g of sugar per 100ml, will fall into the higher tax band, while the new Irn-Bru – with four rather than 8.5 teaspoons of sugar per can – will be exempt.

Over the past year supermarkets have been reformulating their own brands fizzy drinks to avoid the tax while this week Waitrose banned sales of so-called energy drinks to under-16s, amid growing concerns about high levels of sugar and caffeine.

Coca-Cola said it was in discussions with retailers about the impact of the soft drinks tax on Coca-Cola Classic. “These discussions include reviewing the pack sizes offered to consumers and our approach to price-marked packs,” a spokesman added. 

While the soft drinks giant has been willing to change the ingredients of other drinks in its portfolio, including Sprite, Fanta and Dr Pepper, its reluctance to tamper with Coca-Cola is understandable.

One of the darkest hours in the Coca-Cola company’s 125-year history came in 1985 when it changed its famous secret recipe. What was billed as “new Coke” was a marketing disaster, sparking a huge consumer backlash that forced the company to revert to the original taste 79 days later.

While the thinking behind the sugar tax has generally been well received by consumers, they have found some drinks harder to swallow minus the sugar. According to industry data sales of Lucozade, owned by Japanese drinks group Lucozade Ribena Suntory, slumped 4% last year as some drinkers complained about the taste.

Duncan Brewer, a partner at consultancy firm Oliver Wyman, said it would be interesting to see which approach to dealing with the sugar tax was the most successful. 

“I’m not surprised Coke is reluctant to reformulate given the ‘new Coke’ debacle,” said Brewer. “But they also have the negotiating power to pass the price rise on to retailers. I’m pretty sure they won’t eat the cost of the tax themselves. A.G Barr is a smaller player so less able to do so, so has had to take this riskier move.”

AG Barr said it had run lots of taste tests and that nine out of 10 regular Irn-Bru drinkers could not taste the difference. “The vast majority of our drinkers want to consume less sugar so that’s what we’re now offering,” said a spokesman.

Allen remains hopeful AG Barr will rethink its decision to tamper with the “ginger”. But if his petition fails he advises consumers to vote with their feet: “Once the pish water hits the shelf in January #boycottbarrs.”


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