For Success in the UK Soft Drink Market, Low Sugar is a Must

AG Barr, the producer of the popular line of UK soft drinks Irn-Bru, is seeing a sweet increase in market share after a new government levy on the sugar content of soft drinks. Following a massive makeover of the entire Irn-Bru line, AG Barr saw a whopping 3.6 percent increase in profits, with the Irn-Bru line pulling in an 8 percent increase in sales. This increase in profits and share value has been attributed to the company’s ongoing low-carb and low-sugar innovations.

New sugar taxes turn sweet profits sour

According to experts, the success of AG Barr has been significantly impacted by the company’s focus on its low-sugar line of products. A report by UK news outlet Independent revealed that the company underwent a massive overhaul in order to turn this sharp jump in profits. Ninety-nine percent of Irn-Bru’s portfolio of products had their recipes analyzed, and were reformatted to include “5g or less” of sugar per 100ml.1 This involved serious sugar cuts for many of Irn-Bru’s products. As much as 70 percent of sugar was eliminated from each individual formula, thanks largely to the UK’s new government levy on sugary soft drinks.

“The key to success in the coming year is the performance of the lower sugar Irn-Bru recipe, both the new Irn-Bru XTRA variant and reformulation of the main line,” commented UK equity analyst Nicholas Hyett. 1

UK government tells companies: skimp on the sugar

Irn-Bru’s recipe rebranding comes at an ideal time for companies based in the United Kingdom. A new sugar levy put into place in April of 2018 placed new fines on soft drink producers on a sliding scale of sweetness; the more sugar a soft drink contains, the higher the fine. Companies will be fined “24p per liter of drink if it contains 8 grams of sugar per 100 milliliters.”2 The new tax from the United Kingdom joins a growing list of countries putting new regulations into place to stop the world’s obesity crisis.

Is culture shifting away from sugar?

This move by AG Barr is, in part, a result of government pressure on companies around the globe to give sugar the cold shoulder. European corporations are in a race to develop high-quality and low-carbohydrate products that both consider the dietary preferences of a generation more educated on health and retain the flavor of the original recipes. Confectionary king Nestlé’s research department has been particularly prolific in appealing to consumers’ penchant for low-sugar perfection by going so far as to develop their own line of “designer sugar,” which uses the incorporation of air to minimize the amount of processed sugar that is needed to fill the recipes of old standbys.

What is pushing this cultural cold shoulder towards sugar? Experts say that the cultural movement is based on a public that is becoming more and more educated on the importance of diet’s connection to health. As information becomes more readily available thanks to the power of the internet, consumers are more informed than ever on how low-carb diets can improve everything from weight to the prevention of cancer. This has resulted in an all-time high demand for low-carb products and sweets that limit their usage of processed sugar.

The message of the UK market and the world as a whole is becoming more and more clear: if brands want to compete, they need to cut the carbs and sugar when cooking up new recipes.