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The Sugar Challenge –

Past, Present and Future Outlooks
within Beverages

White Paper by GlobalData August 2022

The sugar reduction challenge
Overview
Concerns around the link between excessive sugar
consumption and health have been part of the
conversation for a number of years. In 2020 and
2021, the COVID-19 pandemic has heightened the
focus on self care – including healthy eating as a
way to support the immune system. According to
GlobalData’s latest consumer survey, over 70% of
consumers globally are trying to reduce or avoid
consumption of sugar.
The global obesity epidemic and related disorders,
with their human toll and medical cost burden, are
one of this century’s primary health challenges. To
meet this challenge, a reduction in the intake of
sugar-sweetened beverages
and foods is advised by the WHO as part of a
healthier diet.
•Many governments have responded to this
call by imposing taxes on sugar-containing
beverages – seen by many as the main source of ‘empty’ calories.
•Beverage manufacturers have reacted by reformulating their offerings and launching low- and no-
sugar drinks.
•Beverage producer associations around the world have made voluntary sugar- and calorie-
reduction pledges to help consumers reduce their sugar intake from beverages.
Against this backdrop, growth in global sugar consumption has been slowing down for a number of years.
While there are many factors behind this trend, it is undeniable that changing consumer preferences are
an important driver, along with initiatives by governments and the industry.
The winners in the ‘war on sugar’ have been low- and no-calorie alternative sweeteners – ranging from
established ones (such as aspartame and acesulfame K) to more recent ones (for example, monk fruit and
allulose). Consumption of these sweeteners has grown at very fast rates over the last decade. Looking
forward, their demand growth is expected to continue to outstrip that of sugar and other caloric sweeteners.
But replacing sugar is easier said than done. In addition to sweetness, sugar confers many functional
properties such as bulk, texture, browning and preservation, which require a toolbox of ingredients to be fully
replicated. This is why reformulation is easiest in beverages, where water provides the bulk, but very
challenging in applications such as bakery.
However, there is no shortage of solutions out there. Established food ingredient manufacturers as well as
start ups have developed products which enable food and beverage companies to replace part, or all, of
the sugar contained in food and beverages.
With demand for low- and no-sugar in beverages (and food) here to stay, the future is bright for sugar
alternatives.
Focus on decreasing sugar consumption
The debate around the reduction of sugar consumption is very much on the radar for individuals,
industries, retailers, government and regulatory bodies, but ultimately where does the buck stop?
The global obesity epidemic and related nutritional issues are this century’s primary social health concern. The
World Obesity Atlas 2022, published by the World Obesity Federation, predicts that one billion people globally,
including 1 in 5 women and 1 in 7 men globally, will be living with obesity by 2030.
According to the WHO European Regional Obesity Report 2022 (May 2022), almost 60% of adults and
nearly one in three children in the WHO European Region are overweight or obese. Recent estimates
suggest that being overweight or obese causes more than 1.2 million deaths across the WHO European
Region every year; the fourth highest cause of death after high blood pressure, dietary risks, and tobacco;
corresponding to more than 13% of total deaths.
Consequently, reduction in intake of sugar-sweetened beverages (SSBs) and foods is advised around the
world as part of healthier dietary patterns to help reduce the risk of obesity and obesity-related disorders.
The UK was been chosen by the WHO in 2021 to lead a new Sugar and Calorie Reduction Network to take
global action on sugar and calorie reduction.

Global: How much attention do you give to ingredients

used in the food and drinks you consume?
The COVID-19 pandemic has resulted in
heightened health concerns, prompting
consumers to re-evaluate their health
priorities and make product choices with
a greater focus on the ingredients
contained in these items. According to
GlobalData’s
Q1 2022 consumer survey, one third
(33%) of global consumers now pay
‘very high attention’ to the ingredients
in the food and drinks they consume.

Source: GlobalData 2022 Q1 Global Consumer Survey

The health consequences associated with excessive sugar consumption have made many individuals more
conscious than ever before about the amount of sugar and other ingredients in the items they eat and drink.
Many are reading labels and reaching for low-, no- and reduced-sugar products.
In addition to consumers, the food and drink industry is also taking steps to address the sugar challenge;
satisfying the consumer desire for all things sweet whilst also focusing on dietary health concerns. Significant
effort has been put into re-formulating products towards lower sugar and sugar-free product variants in soft
drinks – these are relatively easy to reformulate with sugar alternatives. Around the globe, governmental
bodies have also joined the push for less sugar through education campaigns and, increasingly, sugar taxes
on products, especially SSBs.
Reduced and no-sugar SSBs are here to stay, thanks to changes in consumer sentiment, advancements in
sweeteners and taste modulation technologies and the anticipation and implementation of sugar taxes.
The industry has been spurred into action, and sales trends suggest that consumers largely approve of
lower sugar reformulations and new product launches.
Growth in sugar demand is slowing down
While sugar demand is still growing as population increases and incomes rise; taxes, product
reformulations, changing tastes and the impact of COVID-19 have led to a slowdown worldwide.

Growth in global sugar demand has been decelerating for many years, reflecting, among other
elements, changing consumption patterns in response to concerns about the link between sugar and
health.
In 2020 and 2021, consumption was also hit by the impact of the COVID-19 pandemic.
Growth in sugar demand has been slowing for a significant amount of time.
Demand growth was around 2-3% per year in the early 2000s but is now closer to 0-1% per annum.

Trends in Global Sugar Demand

This is attributable to many factors-
1: Recession in some major consuming countries –
Argentina, Brazil and Venezuela – which resulted in falling
sugar demand in these markets.
2: A period of accelerated substitution of high fructose
syrup (HFS) for sugar in China, when corn prices fell
relative to sugar prices.
3: Changing attitudes towards sugar and the introduction
of sugar taxes on carbonated drinks has prompted a wave
of product reformulation and innovation by food and
beverage manufacturers.
Source: LMC International, part of GlobalData

Demand fell sharply in 2020 because of the COVID-19

pandemic, which negatively affected consumption.
The loss of near-term consumption mostly stemmed from
lockdown measures, which greatly reduced away-from-home
consumption. This included the hospitality sector as well as
consumption of soft drinks and snacks on-the-go.
However, in some cases consumption rose due to the pandemic,
which is the case in countries such as Brazil where the basic
income support provided to citizens enabled more discretionary
purchases.

According to LMC International, global sugar consumption is

forecast to reach 173.6 million tonnes in 2022, up 2.3 million
tonnes or 1.3% from 2021.
This is above the average growth rate in recent years because of the
ongoing recovery in demand from the COVID-19 pandemic.
Consumer choices influenced by
‘health and wellness’
Many consumers worldwide are demanding a reduction in the amount of sugar used in food and
beverages, as tastes change and concerns about health rise.
Global: Consumers always/often influenced by the following features when making product choices

Source: GlobalData 2022 Q1 global consumer survey

Consumer purchase choices are influenced by a range of considerations, from time and budget, to flavor
preferences and sustainability concerns. However, the factor that is most influential when making product
choices is the extent to which the product or service impacts health and wellbeing, with almost two-thirds
(66%) of global consumers always/often influenced by this when shopping.

Furthermore, 72% of consumers globally are trying to reduce or avoid sugar. According to GlobalData’s
2022 Q2 consumer survey, one-third of the global consumers are actively trying to reduce the
consumption of calories. Similarly, 38% of the respondents are trying to cut down the consumption of
sugar. Over a quarter of consumers are trying to avoid artificial flavors and
sweeteners and 23% and 21% of consumers respectively are actively cutting down the consumption of
products that include these.

Global: What best describes

your consumption of the
following?

Source: GlobalData 2022 Q2 Global Consumer Survey

Top 10 claims in non-alcoholic beverages by product count1

No sugar, vegan and high vitamins are popular claims in product
innovations globally. This indicates that brands are assessing
the health awareness that consumers have developed because
of COVID-19. In fact, according to GlobalData’s 2022 Q1 global
consumer survey, 41% of global consumers find information
about health benefits of ingredients essential when deciding
which food and drinks to purchase.

Source: GlobalData
Note:1) Product count on GlobalData Product Launch Analytics between January 1 and March 31, 2022
F&B response to push for decrease in
sugar consumption
In response to the growing demand for reduced-sugar beverages, and growing government legislation
efforts, such as sugar taxes, beverage manufacturers have responded by reformulating their offerings and
introducing new, lower-sugar beverages.

The company reduced the average amount of added sugars in its soft drinks' offerings by
26% between 2000-2019, globally. Over 60% of new beverage launches by Coca Cola in the
last decade have been no- or low-sugar (and calories).

In 2021, PepsiCo announced plans to reduce sugar content by 25% by 2025 and 50%
by the end of this decade in beverages like Pepsi-Cola, Lipton Ice Tea and 7UP, across
the EU.

79% of all Britvic drinks sold in 2021 were no- or low-calorie drinks; in Great Britain
and Ireland, 94% of their innovation activity in 2021 was in no- or low- calorie
drinks.

Suntory has set a target to reduce the use of sugar in all their products in Europe by
35% by 2025 compared to 2015. At the end of 2021, they had succeeded in reducing
the amount of sugar used in their products by 23% compared to 2015.

In addition to reformulating, many food and beverage manufacturers have formed alliances or have
collaborated with beverage associations to focus on reducing sugar consumption, in addition to educating
consumers on the benefits of zero-calorie sweeteners.

In September 2014, the American Beverage Association, Coca-Cola, Dr Pepper Snapple

Group, PepsiCo, and the Alliance for a Healthier Generation announced a commitment to
help reduce liquid refreshment beverage (LRB) calories in the US diet by 20% by 2025. Owing
to the sugar reduction efforts by this alliance, the average LRB calories per person fell by 10%
between 2014-2020. The annual decline has accelerated every year since 2016, with the
largest single year decline (-5%) in 2020.

In 2018, an alliance of food and beverage brands on the UK’s high streets launched a Code
of Practice to commit to changes in health & wellness programs, including a sugar
reduction target of 20% (Public Health England’s sugar reduction target
by2020). The companies included Caffè Nero, Costa, Greggs, McDonald’s, Mitchells & Butlers,
Pizza Hut, Premier Inn, Starbucks, Wetherspoons, and Whitbread Restaurants.

Aside from focusing on sugar substitutes, several food and beverage manufacturers have also made
interventions around portion sizes. These changes include the introduction of ‘child-friendly’ portions and the
removal of double-serving options from the market. Soft drink companies which have introduced smaller
sizes in their portfolios to allow consumers to enjoy their products in moderation include Keurig Dr Pepper
and Coca-Cola.
UNESDA and ICBA committed to reduce sugar
consumption
While there is no one solution to solve the complex issue of sugar reduction, the global beverage industry
recognizes that it is critical that all stakeholders collaborate to develop holistic and sustainable solutions.
Consequently, many beverage associations around the world have stepped up to be part of the solution
and have made voluntary sugar- and calorie-reduction pledges to help
consumers reduce their sugar intake from beverages. Measures include smaller portion sizes, a wider range
of no- and low-calorie beverage offering and transparent nutrition information.

UNESDA - representing the European soft drinks industry

Over the past decades, Europe’s soft drinks sector has been on a sugar-reduction journey to offer
healthier options and promote moderate consumption. Owing to this, UNESDA and its members have
delivered significant sugar reductions from 2000-2019.
•13.3% reduction in average added sugars between 2000-2015
•14.6% reduction in average added sugars between 2015-2019
•3.6% reduction in average added sugars between 2019-2021
In June 2021, working in collaboration with GlobalData, UNESDA announced its new commitment to
further reduce average added sugars in soft drinks1 by another 10% from 2019-2025 across the EU- 27
and the UK.

Europe - Kcal Per 100ml Soft Drinks2

Kcal Reduction 2000-2021
-9.7

All countries studied in Europe show a strong trend in

reducing sugar levels across the period. The UK is a key
driver of this, and the introduction of Sugar Tax has resulted
in sugar levels in soft drinks almost halving.
Source: GlobalData for UNESDA

International Council of Beverages Associations (“ICBA”)

The ICBA, through its voluntary actions, aims to reduce sugar consumption from beverages.
Like UNESDA, it has succeeded in reducing both the calories and sugar consumed in non-alcoholic
beverages over the past twenty years. With GlobalData’s help, it is currently defining its next sugar
reduction pledge.
Avg. Calorie/100 ml in LATAM Avg. Sugar/100 ml in LATAM

Source: GlobalData
Note:1) Includes all soft drinks categories: still drinks, fruit drinks, carbonates, energy drinks, sports drinks, dilutables, iced teas and coffees, flavored waters
2) The data represents Kcal Per 100ml Soft Drinks for 7 Markets – Belgium, France, Germany, Romania, Spain, Sweden, and UK
Governmental response –
SSB taxes in action
Governments can take several measures to improve availability and access to ‘healthier’ food and beverages.
A major action for comprehensive programs aimed at reducing consumption of sugars is taxation of sugar-
sweetened beverages (SSBs).
Taxation on SSBs is an effective intervention to reduce sugar consumption. Additionally, a 25% increase in the
price of SSBs resulting from higher excise taxes would likely lead to a 34% reduction in consumption of these
drinks, according to 2021 study by Pan American Health Organization.

Taxes can be categorized into three broad groups:

General taxes: Sugar/HFS targeted taxes: Sugar content-linked taxes:

These are applied regardless of
whether the drink is sweetened
with caloric sweeteners (such
as sugar
or HFS) or non-caloric
sweeteners (such as high
intensity sweeteners - HIS).
These are applied only to soft
drinks sweetened with sugar or
other caloric sweeteners, with
the same rate of tax applied
regardless of sugar content.
These are designed to create a
price difference between
product containing caloric
sweeteners, giving consumers
an incentive to switch to zero-
sugar options.
These taxes are more
sophisticated; the value of the
tax increases as the sugar
content of drinks increase.
They are applied either using
bands of sugar content or per
gram of sugar per unit of
volume. These are designed to
incentivize producers to
reformulate their products to
lower sugar content.

Number of Sugar Taxes in Use (2021)

There has been a marked increase in the

countries applying SSB taxes, especially
over the past four years.
There is also clear trend towards
more sophisticated policies aimed
at encouraging bottlers to
reformulaterather than simply pushing
consumers to abandon consumption of
some products.

Source: LMC International, part of GlobalData

In the UK, the imposition of a sugar-linked tax, led many brands to reformulate their products so that they
would fall below the tax thresholds, although some manufacturers chose not to alter their flagship brands.
Supermarkets were quick to reformulate private labels; in most cases, ‘added sugars’ were replaced by a
sugar/HIS blend (for example, sugar/ sucralose/acesulfame K, sugar/ aspartame/acesulfame K and sugar and
steviol glycosides).
SSB taxes employed globally
Over 50 countries have implemented taxes on SSBs to date. SSB taxes have led to reformulation of SSB
products in some countries, reducing the amount of sugar consumed in these drinks.
Country SSB Tax description
•An SSB tax, called the Soft Drinks Industry Levy,
was introduced in the UK in April 2018.
•It is a two-tiered levy that taxes producers
according to a drink’s sugar concentration, with
different rates for different sugar levels.
United
Kingdom •Drinks containing >8g of sugar per 100 mL are taxed
at £0.24 per litre and those containing 5-8g per mL of
sugar are taxed at £0.18 per litre.
•The tax is only passed on to consumers for drinks
with >8 g sugar/100mL, which underwent an
average price increase of £0.075 per litre.
•Mexico introduced a volumetric SSB tax in 2014 – a
tax of 1 peso per litre on SSBs - that led to a price rise
Mexico
of about 11% for soft drinks, and a slightly smaller
increase for other sweetened beverages.
•In 2018 South Africa introduced a 10% tax - the
Health Promotion Levy, on sugary drinks,
South
excluding fruit juices.
Africa
•A tax of 0.021 ZAR per gram of sugar is applicable in
drinks with over 4 g of sugar per 100 mL
Source: LMC International, part of GlobalData, 2021
Effects
•The UK tax led to widespread reformulation to reduce
sugar levels in SSBs.
> The reduction in sugar was the equivalent of
removing a total of 45 million kg of sugar from soft
drinks each year
•There was a 43.7% reduction in the sugar content in the
drinks subject to the tax in four years after the tax was
introduced.
•The amount of sugar in drinks has been reduced,
without affecting overall sales.
> A year after introduction of the tax, the total volume
of purchased soft drinks (including those that are not
subject to the new tax) has remained unchanged.
However, the overall amount of sugar in soft drinks
was reduced by 10% (30 g).
•Reduction in the volume of SSBs purchased after the
new tax started.
> By 2016, there was a 7.3% reduction in the total volume
of SSBs purchased, compared to 2007-2013.
> Purchases of carbonated drinks by households fell by
an average of 29% after the tax was introduced.
> The amount of sugar purchased in these drinks fell by
51%
Push for high-intensity sweeteners (HIS)
Global concern about excessive sugar consumption has led to rising demand for alternative sweeteners as
sugar substitutes. Non-caloric alternatives to sugar and high-fructose syrup (HFS) include high intensity
sweeteners (HIS). These consists of long-standing products like saccharin, cyclamate, aspartame and
acesulfame-K, and a ‘newer’ generation of sweeteners such as sucralose and stevia.

Key properties of HIS

•They are extremely sweet - •They lack bulk, which means an

often several hundred times additional ingredient is needed in
sweeter than sugar many applications to replace the
•They are easy to transport. bulk provided by sugar.
This means production is •Some HIS have a bitter
concentrated in a few countries. aftertaste, requiring other
•Most HIS are significantly ingredients to be added to
cheaper than sugar. mask this

Sweetness
Sweetening Power1 Aftertaste Bulk/Texture
perception
Acesulfame-K 200 Fast onset Slight X
Aspartame 200 Similar to sugar None X
Cyclamate 30 Fast onset Slight X
Saccharin 300 Fast onset Bitter X
Stevia/Reb-A 200 Similar to sugar Slightly Bitter X
Sucralose 600 Similar to sugar None X

Sweeteners Growth Rates

According to LMC International, the HIS category has
experienced the fastest rates of growth until now and is
further expected to grow faster than other types of
sweeteners. This growth in HIS is mainly driven by rising
consumer awareness, increasing demand for healthy
products, and further supported by the introduction of
SSB taxes. SSB are an area where HIS can be relatively
easily substituted for caloric sweeteners as water
provides the bulk.
Source: LMC International, part of GlobalData

Amongst the mainstream HIS, stevia sweeteners are expected to experience the fastest growth rates, primarily
driven by growing demand for alternative sweeteners with natural credentials. Prominent food and beverage
companies offering stevia-sweetened products include Coca-Cola, Danone, Nestlé, PepsiCo, Unilever and Ricola.
Even though many national authorities have recognized HIS as safe and well-tolerated, a lot of controversies
about the effects of these sweeteners on human health still exist. Although the use of HIS seems promising in
assisting weight loss, they have been linked to a variety of health concerns.

Note:1) The sweetening power of Sugar is 1

Future outlook – what next?
The impact of Covid has resulted in in consumers increasingly taking charge of their own health and
wellbeing. Consumer interest in reducing sugar intake is continuously increasing and with it,
a growing number of food industry solutions aimed at helping consumers adapt to this new sugar- free or
low-sugar lifestyle. Consequently, food and beverage companies now have a broad toolbox available to
tackle the challenge, whether they opt for HIS, re-engineered sugar, flavors, or a combination of solutions.
These sugar replacement ingredients can be used alone or in blends to replicate the sweetness of sugar.
Because sugar confers additional functional properties such as bulk, texture, browning and preservation,
sugar reduction often requires additional ingredients or combinations of non-nutritive sweeteners to
replicate the full sensory experience of sugar. Technologies such as fermentation, bioconversion, and
enzymatic production have opened the door to large scale replication of sweeteners that occur naturally in
only small amounts.

• Some of the innovations or discoveries in the sugar industry

include monk fruit sweetener, allulose and sweet proteins.
• Allulose – Is a monosaccharide, or simple sugar, that is found
naturally in very small quantities in foods like figs, raisins, and
maple syrup. It is 70-80% as sweet as sugar and has about 10% as
many calories as regular sugar.
• Monk Fruit Sweeteners – The extract of the monk fruit
contains sweet compounds which have 150-200 times the
sweetness of sugar. Like stevia, monk fruit benefits from the
natural halo.
• Naturally occurring sweet proteins, such as brazzein from the
oubli plant and thaumatin from the katemfe fruit, have been
viewed largely as small-scale or novelty ingredients due to
difficulties of scaling up production, as well as stability and taste
issues.
• With consumers looking for products with low sugar content,
driven by the association between sugar reduction and wellness,
there is a strong opportunity for HIS especially in products where
technical limitations are limited, such as beverages.

Although a lot is happening in the beverage industry and in many food categories, such as bakery, frozen
dairy and snacks, sugar reduction is still a real challenge because sugar plays an instrumental role in not only
bringing sweetness but also providing key attributes such as browning, freeze-thaw stability, binding and
mouthfeel. Some of these challenges can be overcome by replacing sugar with soluble and natural fibers.
One such example is chicory root fiber, which can replicate sugar’s functions as a flavor enhancer and
texturing or bulking agent (has a sweetness of approximately 10% compared to that of sucrose). Another
known fiber for sugar reduction is acacia gum, which helps with the glycemic response of food and drinks.
Owing to the increased consumer concerns regarding sugar consumption, there is a heightened focus
on finding new innovative alternatives to caloric sugars.
To find out more about the future of sugar, please reach out to GlobalData and LMC International.
Conclusions
Key considerations for effect of reducing sugar consumption
• Growing consumer concern regarding health and well-being has
resulted in increased focus on reducing sugar consumption, with new
measures employed by both manufacturers and governments globally.
• With consumers looking for low-calorie or no or low-sugar options, many
food and beverage manufacturers are now reformulating their drinks by
reducing the sugar content or reducing their portion sizes.
• In addition to manufacturers, most governments across the globe have
introduced taxes on SSB’s to ensure less consumption of sugary drinks.
Alongside the governments, many beverage associations such as UNESDA
and ICBA are also taking voluntary actions to restrict the limit of sugar
consumed.
• Owing to this increase in efforts to reduce sugar consumption, a slew
of sweetener manufacturers are now focusing their efforts into
researching or finding newer and better sugar substitutes.
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