Is the issue of sugar becoming too taxing?

Experts from Oxford University have called for sugary drinks to be taxed at a level of around 20% in the UK, as one measure to encourage healthier diets and help tackle the obesity crisis in the UK.

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The Oxford team argues that government intervention such as taxation can be justified when the market fails to provide the ‘optimum’ good for society’s well-​being, as with the duties on alcohol and tobacco for example.

Dr Mike Rayner of the Department of Public Health at Oxford argues that a tax on unhealthy foods would act as an incentive to encourage manufacturers to change what goes into their products and make them healthier over time, stating that, “a tax on sugary drinks is one measure that is a safe bet to change how many calories people consume across the nation and have a significant effect on obesity levels”.

This seems to be the opinion presented from those health advocates who believe this is a bulletproof plan to slash obesity rates, thus reducing the incidence of obesity related ailments.

However, Dr Rayner is careful to state that a tax on sugary drinks is not going to cure obesity by itself.

The other side of the argument

A different view is being heard from the manufacturers of the food and drinks market, who feel they have worked hard over recent years to cut sugar and ensure consumers are aware of the ingredients in their products.

Richard Laming, media director of the British Soft Drinks Association, offers his thoughts: “A tax on soft drinks wouldn’t help deal with obesity. Obesity has been rising even though the consumption of calories in soft drinks has not. And the latest figures show that soft drinks make up only about 2% of the average diet.

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Laming is adamant that taxation of soft drinks is not the way forward, but health promotion, education and exercise would have a better impact: “The right thing to do would be to promote balanced diets and active lifestyles through information and education,” he says. “Regulation and taxation do not work.”

Far from the thought that the drinks industry is contributing to the obesity epidemic, Laming believes adequate steps have been taken in order to provide choice, health and nutritional information.

He says: “The soft drinks industry helps consumers by providing nutritional information on-​pack, including GDA information in a signpost format. Diet, low calorie and no-​added-​sugar drinks now make up 61% of the market, up from around30% 20 years ago.”

Food and Drink Federation director of communications, Terry Jones, offers a similar argument: “When the whole of the food industry is focused on continuing to give hard-​pressed families great-​tasting food at an affordable price, discussion of adding20% to food prices seems fanciful if not irresponsible.

“Under the Public Health Responsibility Deal, we will continue to work with government and other stakeholders to make meaningful improvements in public health through pledges in areas such as salt and calorie reduction, and our commitment to improving the health of our employees.”

There is a clear difference of opinion between manufacturers who claim to adhere to progressively stricter health guidelines, and researchers who present information that they claim proves this isn’t the case.

So who will win the sugar tax war? New taxes introduced in Denmark (on saturated fats) and France (on sweetened drinks) will provide an opportunity to evaluate the effectiveness of such measures in the coming years, and perhaps prove whether the same legislation could be as effective (or not) in the UK.

Have carbs become ‘scapegoat’ for weight gain?

Rebecca Prescott15 May 2012

A new report claims that the simplification of complex nutritional messages has resulted in grain foods such as bread and pasta becoming the ‘scapegoat’ for weight gain and bloating, despite ample research to the contrary.

In terms of diet and nutrition, it’s sometimes difficult to separate fact from fiction. Myths relating to new ways to lose weight tend to be presented as fact and stick in consumers’ minds, which can be potentially dangerous.

Negativity surrounding carbohydrates and grain-​based foods has caused a carb-​free trend among dieters and the health conscious, which is a potentially worrying situation.

The new report shows that an estimated 26% of Australians are limiting grain foods such as bread and pasta to help lose weight, despite numerous studies confirming that whole grain consumption has a beneficial effect on weight loss.

Professor Manny Noakes has recently shared the latest findings on the benefits of grain foods in the diet. Noakes highlights the importance of choosing quality carbohydrates, rather than regarding them as a homogenous category.

“Cutting out highly refined or fat and salt-​laden carbohydrates is a good idea, but culling high fibre and low GI grain foods at the same time is just throwing the baby out with the bath water,” she says. “Studies show whole grains may have a critically important impact on body composition, particularly in being able to reduce abdominal fat.”

The research reveals that 16% of Australians may be avoiding wheat-​based foods, with a significant 35% self-​diagnosing dietary conditions, yet Coeliac disease affects just 1% of the population.

Science is now telling us that fibres may be more effective in combination than individually, so there needs to be greater emphasis on eating not ‘more’ fibre, but a diverse range. In practice, this means soluble, insoluble and, crucially, resistant starch.

Not only do grain foods provide energy and a number of vitamins and minerals, the right combination of fibre can help stabilise blood sugar levels in people who suffer from adult-​onset (type II) diabetes.

A UK nutritionist wrote an article this week that suggests that our low-​fat obsession may harm our health and that we should all start consuming more fat, ‘including the much-​demonised saturated fat’. I’m not sure this idea will catch on with the fat-​fearing consumers quite as successfully as the low-​carb trend.

Selective eating is becoming a popular lifestyle choice, but perhaps selective hearing is also trending among consumers who seem to pick and choose which health fad is right for them, rather than looking at the science.

andrewwildey said:

Rebecca, thank you. I often see people avoiding carbs for the reasons you’ve identified, and replacing them with non-​carb foods including cheese and fatty meat products that rather defeat the purpose of fat reduction/​weight loss. As a recent convert to a paleo diet, I choose to avoid refined carbs along with other processed food products, as I view them as ‘unnatural’. But I’m a big fan of naturally starchy carbs such as root vegetables. I think a balanced diet in which you take control of the amount of carbs you eat and the time of day you consume them is key. Although a slightly more complicated message for food manufacturers to communicate to consumers compared to ‘carb free’.

How to build successful food and beverage brands

Tony Chambers has been account director of Bedford-based branding and marketing company Eat with Your Eyes for 12 years. The company specialises in the food retail industry and work with the likes of Greene King, Merlin Entertainment Group and Aramark UK. 

Tony Chambers, account director

Functional products, including food and drinks products, were the original great brands. FMCG's that were the weekly essentials for households: Bars of soap, washing powders, tea and coffee, cereals, etc. In its earliest phases, brands made some amazing claims about their product properties to achieve real differential, usually based on a small grain of truth.

But as branding evolved and matured, one of the key cornerstones was integrity. Great brands were built on clearly identified values which accurately captured and communicated what made them different and special. Quality and consistency had to be a given in building brands which could compete and succeed in their market. We began to trust and accept that BMW was technically superior and very well built.

Singapore Airlines consistently delivered a uniquely special level of customer service. John Lewis was the custodian of integrity on the high street.

Today branding has expanded to cover a whole range of customer emotions and experiences. It is usually pivotal to success in a competitive market to deliver added value to the consumer which by brand association makes them feel special and plays a part in expressing their personality. Niketown is a great example of brands taking products to an enhanced customer experience level.

The functional food and drink market has seen explosive growth in recent decades, and consumers have a growing and insatiable appetite for healthier, more natural and pure products which are better for their bodies and for the planet. With this growing consumer craze has developed a booming market of new products, accompanied by some eye-opening marketing claims about their ingredients and special properties.

The brand is now vitally important in the consumer buying process, and a key tool in motivating choice of a particular product.

Here are a few key drivers to ensure a new brand starts on the right path to success in this market:

• the brand must be genuinely expert in what it does
• It should have a clear idea of exactly who it is being marketed to
• The brand must be trade mark registered to avoid conflict with other products on the market
• The benefits it promotes must be credible and genuine
• A great brand should really care about its customers to ensure long term loyalty
• In the food and drink market, promises about health and wellbeing benefits must be sound
• It should create a distinctive promise or vision which the consumer can really feel
• The quality of design and messaging on packaging is key to this

Great and successful brands have the capacity to enrich our lives, make us feel special and part of their unique world, as well as providing us with a functional and useful product which is of high quality and value for money. Consumers are not stupid, and any brand which does not meet these fundamental principles will ultimately fail anyway, no matter how powerful the marketing spin.

The Jamie Oliver brand keeps evolving and maturing through his unrelenting food passion and ethical food initiatives. He has moved from TV chef and cook books, to monthly magazines and on to high street restaurants and high end culinary products. His genuine ideology makes his brand one that keeps growing and that people are very happy to associate with. Another example of brand success is Innocent Drinks who always have a fantastic tone of voice and unique visual style. Innocent, not the cheapest, ooze trust and quality through an inherent brand confidence built on simple and pure brand values and principles.

The Jamie Oliver brand keeps evolving

Although successful brands are always evolving and changing to meet consumer trends, the core building principles still remain true and critical to success: integrity, trust, quality, value and consistency.

Consumers love brands that can stretch and weave these values to create a unique world which they can share, and which makes them feel unique and special by association.

But they will be quick to abandon a dream which fundamentally is a lie.

Having the guts to eat offal

As the kind of person who prides herself on unfussy eating, and admittedly guilty of judging those who say ‘they don’t eat vegetables’ as if it would be the beginning of a slow death if something green and natural was to pass their lips, I have to admit I don’t eat enough offal. 

Consumers tend to be scared of the more unusual parts of the animal if it has any relation to bodily functions — faeces, urine — I won’t go on. Yet, I predict these same consumers would gobble down a processed pizza complete with question marks over the origin of the so-​called ‘meat feast’ from our local take-​aways, with no hesitation.

Offal and other parts of the carcass which tend to be kept back for the bin, are actually very nutritious (and cheap).

Image: avlxyz

By simply eating the socially acceptable and more familiar cuts of meat, people limit themselves from a variety of new flavours and textures of meat which can provide a range of health benefits.

Everything but the squeal

Offal is a hugely underrated product, and with food waste on the rise, and protein sustainability and the environmental impact of farming under scrutiny, it seems it is time to once again push the idea of utilising those parts of the animal which tend to be disregarded.

So in honour of the phrase ‘everything but the squeal’ here are a few of the many reasons why we should all start utilising more of our meat.

Image:  QuinnDombrowski

Offal is rich in protein (for immune system, energy and healthy cell growth). Offal provides an abundance of B vitamins, which are needed for a healthy blood and nervous system.

Liver, heart and kidneys in particular are a good source of iron. They are also rich in vitamin A, important for growth, reproduction and healthy skin, hair and eyes.

What’s the catch?

Liver and kidneys are high in cholesterol, but the body is good at breaking it down in this form, so it doesn’t usually have a negative effect on the levels of LDL (bad) cholesterol — so there is really no catch at all.

I once read that the French used offal quite frequently in their cooking as a sign of respect to the animal for sacrificing its life and took the attitude that wasting any part of the animal is just plain bad manners.

I won’t be so predictable as to say when considering consuming offal, we should all grab the bull by the balls and go the whole hog, but…

Stress testing your supply chain financial risk

Nick Hood is a licensed insolvency practitioner and head of external affairs at Company Watch, the corporate health monitoring specialists. 

Nick Hood

Now that even George Osborne has admitted that the UK’s battered post-recessionary economy is slowing to a crawl, there can be no doubt that we are heading into a bleak couple of years or probably longer.  The implications for everyone in business are profound, with the low/no growth scenario threatening the health and survival of many supply chain links, especially those companies which have already eaten their fat during the recession and were looking to the recovery phase to restore their financial strength.

Never has it been so important for procurement professionals to copy their credit control colleagues who monitor bad debt risk and start looking very closely at the financial health of the suppliers and service providers on which their businesses rely.  They need to be ahead of the game in spotting potential problems. 

Minimising risk has become paramount and must be an ongoing process.  Simply relying on the due diligence carried out when the relationship started will lead to trouble in these times when a business’s finances can change so rapidly.  What a supplier’s balance sheet looked like three years ago is irrelevant.

So far so good, because most supply chain managers can get access to credit information about their suppliers.  The variety of data available can be bewildering.  Amazingly, there are still UK credit information services which rely on nothing more than the net worth of a company as a guide to creditworthiness.  Then there are various early warning systems, which pick up significantly adverse events like the late filing of accounts, court judgments and formal insolvency filings, providing extremely useful real time data to prompt credit managers to take urgent action to mitigate a potential loss.

At the other end of the spectrum, there are information providers who use complex analytics applied to several key aspects of a company’s financial profile, such as asset management, funding source dependence and profitability, not just as individual factors but in combination and set in the context of the country and the sector in which the business operates, as well as its relative size.  A system like this also looks at trend data over several years, avoiding the snapshot mentality which can be so misleading in a dynamic, rapidly evolving commercial situation.

One of the great problems with most credit information around the world is that it relies on out of date financial data, usually the accounts filed at a public register of some type or advertised through such channels as newspapers.  For example UK public domain information from Companies House can be as much as 21 months out of date, which might be particularly unfortunate when looking at the health of a company going through a sudden and survival-threatening downward spiral.  Fortunately, one of the more sophisticated systems offers modelling capability to stress test risk profiles and look at all manner of “what if” scenarios.  By way of example, this enables its users to input management accounts from suppliers, if they have them.

Take the hypothetical example of a well-established medium-sized raw materials supply company, with annual turnover of some £70m, decent gross margins of 13.4% and post-tax profits of £800k.  Its net worth is £16m.  Running the diagnostics on the latest published accounts to May 2011, the company has a health rating (H-Score) of 33 out a possible maximum of 100, not great but well above the traditional warning zone below 25 where statistically one in four companies will either fail or need major restructuring. 

Using graphics, the health profile trend looks like this:

Source: Company Watch, March 2012

Moving forward six months, the November 2011 management accounts reveal that the business has achieved a commendable 12% rise in sales but commodity and other input price pressure has reduced gross margins by an apparently modest but significant 1.4% to 12%.  Add in a dollop of overhead cost increases and some non-tax deductible reorganization costs and, hey presto, the profits have disappeared.  The sales for the half year are £38m, the gross margin is still £4.6m, but post-tax profits have melted away to only £14k.

The health profile now looks very different:

Source: Company Watch, March 2012

Despite the growth spurt, the supplier’s H-Score has dropped from 33 to 21, inside the warning zone, making the company a potential candidate for failure and very definitely a supplier which needs to be much more closely monitored. This is food for thought for those responsible for supply chain management, who may well only have been told by this supplier that it was doing well in the recovery phase.  After all, who wouldn’t boast about a 12% increase in sales in such uncertain economic times?

This hypothetical example looks at an apparently successful business, highlighting frailties only revealed by current data.  But there are other equally worrying scenarios, where problems could and should have been spotted by a company’s customers long before supply chain interruption was triggered by its eventual failure.  

Take the financial health profile for PSMW Distributor (PSMW), a private company in the mineral water and soft drinks supply sector, which went through a Company Voluntary Arrangement (CVA) in 2011 before being liquidated in the High Court in November 2011.

Source: Company Watch, March 2012

This is a classic illustration not just of the need to recognise when a supplier may be mortally wounded and take action to avoid an unexpected supply chain interruption, but also of how long the warning signs can be there before a company’s final demise.  PSMW was deep in the warning red zone with an H-Score of only 3 out of 100 based on its final published accounts for the year to September 2010.  But it had been in the “red zone” consistently since its September 2006 accounts. It traded right through that whole period and presumably with customers who were either ignorant of the supply interruption risk or prepared to take the chance.

There are of course almost always alternative suppliers, who can be turned to although with inconvenience and potential business interruption.  But making sourcing changes in a hurry and as a forced buyer can be an expensive game, affecting your own margins and bottom line profits.  And imagine the issues if the supplier is overseas.  Finding an alternative source may take longer and be a major management distraction, even after the chaos of dealing with shipments stuck in customs either here in the UK or abroad when the foreign supplier fails to pay freight charges or handling costs.

Taking advantage of the sort of advanced financial health diagnostics described in this article creates the opportunity to identify problems ahead of time and the time to mitigate these effects.  They are available for international companies, as well the UK.  They give buyers something priceless: hindsight in advance.

So, all who take responsibility for their company’s supply chain management, or more precisely its smooth and efficient operation, should be thinking about the potential vulnerability of its components, those suppliers and service providers upon whom they depend.  Once upon a time judging the financial aspects of these risks was a dark art, now it is very much a science and one which, if applied diligently ought not to leave too much room for nasty surprises.

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