Irn-Bru could escape new sugar tax

One drinks manufacturer has risen to the challenge of the UK government’s announced tax on sugar.

Scottish producer AG Barr, which brings Irn-Bru to the market, has said that by the time the tax comes into effect in April 2018 that at least two-thirds of its products will be sugar free or low sugar.

The formula for remaining third will stay in place driven by “brand loyalty and consumer preference”. Loyalty to sugary versions of Irn-Bru, Tizer and the Rockstar energy drink will ensure demand survives the tax, the company said.

The announcement was designed to soothe investor fears over the amount of fresh tax it would have to pay if the high sugar content remained in its soft drink offerings.

The plan would avoid tax on the sugar-reduced two-thirds, while attracting tax on the rest. The company believes its “product reformulation” will allow it “to minimise the financial impact on the business”.

CEO Roger White said that 35% of Irn Bru drinkers, its most famous drink, opted for the sugar-free version. A can of Irn Bru has 34g of sugar, or about seven and a half teaspoons, which would subject it to the highest sugar tax, estimated to be as much as 24p per litre.

The levy, whose cost has not been decided, has two tiers, a lower band for drinks with at least 5g of sugar per 100ml and a higher rate for those with more than 8g per 100ml.

Irn Bru, including its sugar-free versions, brings in 40% of AG Barr's annual revenues.

Mr White has previously been critical of attacks on sugar, arguing that other parts of the food industry such as cakes, chocolates and sweets were not being treated equally.

"We are disappointed that despite the progress we have made in reducing sugar and making it part of our forward strategy this is an industry specific punitive levy. We have been reducing sugar while the amount of sugar in other foods is increasing," said Mr White.

However, he said that AG Barr is not currently considering a legal challenge to the sugar tax.

The Scottish firm recorded sales of £258.6m last year but said sales were dipping across the market in fruit juices, fizzy and energy drinks, while sales of its Strathmore bottled water and cocktail mixer Funkin grew strongly.

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