Sugar tax: Soft drink companies ‘misunderstand and misrepresent’ the numbers

Soft drinks
Soft drinks

The soft drink industry’s campaign against the sugar tax is based on bad economics, impossible jobs numbers and “egregious misuse of data” about sugar consumption.

This is according to think tank Trade and Industrial Policy Strategies (TIPS).

A policy brief released today by TIPS’ Neva Makgetla said the Beverage Association of SA (Bevsa) had most of its numbers wrong.

Bevsa claimed that the proposed tax of 2.29c per gram of sugar in soft drinks would cause a R14 billion drop in gross domestic product – but according to Makgetla this “confuses possible losses to producers of sugary drinks with the broader long-run impact on the economy”.

The companies’ prediction was “predicated on the assumption that consumers could not shift to other products instead”.

This was despite Bevsa itself arguing that this was precisely what consumers would do.

Bevsa also predicted that the tax would lead to between 62 000 and 72 000 job losses, but Makgetla said these figures “vastly overstate the number of jobs that depend on the production of sugary beverages”.

It also assumed there are no countervailing job opportunities in the making of the products people will buy instead.

Bevsa’s numbers implied that the soft drink industry calls into being 20 jobs for every person it actually employs itself.

“These figures are patently exaggerated,” said Makgetla.

If manufacturing had this big a spillover effect, there would be 34 million employed people in the country rather than the 15.5 million we actually have, she said.

A big part of the industry’s job estimates relate to spazas, but according to official labour force surveys Bevsa’s estimate of spaza shop employment is overstated at up to 455 000. Bevsa also assumes that informal retailers are completely dependent on soft drinks, without providing any evidence.

Coca Cola responded to City Press’ queries about some of the numbers Bevsa was using.

Its prediction of how the tax will affect the industry was premised on the manufacturers doing nothing to respond. It assumed that the tax would not get them to reformulate or change the sizes of the drinks they market – both interventions which would automatically cut the tax burden.

The worst part of the Bevsa campaign, according to Makgetla, was its misrepresentation of the role sugar and sugary drinks play in the national diet.

City Press reported recently that Bevsa’s claim that soft drinks are “only 3% of the problem” is based on highly questionable use of the numbers

Read: Sugar wars – A number game

Bevsa took the total volume of sugar used by the industry per year and compared it to the Food and Agriculture Organisation’s (FAO) estimate of total food supply in the country, rendered in calories.

It then averaged this out by the population of 55 million.

According to Makgetla, the FAO number excluded the syrups used by the local industry that was manufactured in Swaziland as well as sugars extracted from maize.

Experts in nutrition also told City Press this past week that the way Bevsa had represented the role of its products made very little sense and misrepresented the problem.

Even the FAO stressed that its numbers must not be construed as an estimate of actual consumption.

“It is common sense that it is implausible to just divide calories by the size of the population,” said Zandile Mchiza, a senior researcher at the Human Sciences Research Council.

“Some people consume more energy than the others and some people do not consume SSBs or sugar-added foods at all.”

“Balance sheets tell us about the total amount of food available in SA, but not all of that would be consumed,” said Salome Kruger, professor of nutrition at North West University’s Centre of Excellence for Nutrition.

“I doubt if there are many people with intakes of 3100 calories per day,” she told City Press.

According to both Mchiza and Kruger, the point should be to reduce consumption among groups that consume too much, especially children.

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