Rachel Reeves’ possible ‘milkshake tax’ could force a family business to move production oversees if it is introduced in the Budget next week, its boss has warned.
Global Brands chief executive Steve Perez said the rumoured changes to the Soft Drinks Industry Levy could lead to making the decision which would “be devastating for local employment and goes against everything we stand for”.
The businessman added that while drinks producers “are not opposed to reform or to improving public health”, they need “clarity, consistency and an openness to collaborate from the government”.
He also said that “changing the rules on sugar content for the third time in under a decade does not create a stable environment for investment or innovation”.
Global Brands, which is headquartered in Derbyshire, is behind the likes of Hooch and VK.
In March, Perez said Reeves’ tax hikes in last year’s Budget were to cost his business an extra £1m a year.
‘Milkshake tax’ to cost business extra £10m
Perez said Reeves’ plans to lower the sugar threshold at which the Soft Drinks Industry Levy applies – from 5g per 100ml to 4g – would cost his business empire an extra £10m a year.
He said: “While on the surface, this might sound like a minor technical change, in reality it represents the third time in eight years that successive governments have moved the goalposts on sugar content – posing huge operational challenges for businesses, who now face either reformulating their recipe for the third time in recent years or being subject to large fees that threaten profitability and local jobs.”
He added: “The move risks penalising not only the larger drinks giants, but also independent British producers like us, who have built reputations on quality, provenance, and natural ingredients – the types of businesses the government should be championing, not penalising.
“The drinks industry has long been one of the country’s quiet success stories. However, with every new piece of legislation, that success is becoming harder to sustain – and this latest proposed change to the sugar tax could well be the tipping point for many.”
Moving entire business out of UK
Perez warned that the possible ‘milkshake tax’ would leave his business empire with three options.
He said: “The first is that we change our recipe to swap natural sugar for artificial sweeteners – a move which, while it would avoid the levy, risks damaging our international sales and having a £10m impact on our revenue – for example in the US where we are experiencing great success currently. It would also be detrimental for our British sugar beet suppliers.
“An alternative would be to develop a separate recipe for the UK market only, whilst keeping the existing recipe for overseas markets. However, this would come at a significant additional cost for the business, which then undermines the very purpose of avoiding the levy in the first place.
“The third option would simply be to move our entire production out of the UK, which, as an independent, family-run business, would be devastating for local employment and goes against everything we stand for.”