Industry warns of rising burden of extended sugar levy as health groups applaud

The UK Government has confirmed that milkshakes and other milk-based drinks will no longer be exempt from the Soft Drinks Industry Levy, in a move designed to tackle obesity and generate new revenue for public services.

The announcement, made by Health Secretary Wes Streeting, lowers the sugar threshold from 5g to 4.5g per 100ml and brings milkshakes into scope for the first time.

Health campaigners welcomed the decision as a “long-overdue step” to protect children’s health, while manufacturers and small businesses warned of mounting costs, reformulation challenges, and consumer price pressures.

Industry reaction: “a thousand cuts wearing businesses down”
James Watson, UK partner at operations consultancy Argon & Co, said the levy itself was small but symbolised a wider problem: “Manufacturers aren’t reacting to the pennies at stake, they’re exhausted from handling a steady stream of fragmented interventions. At this point, it’s the cumulative burden that threatens investment, not this single policy – a thousand cuts wearing businesses down.”

Watson argued that even minor tweaks force costly reformulation, relabelling, and compliance changes, while milkshakes represent only a fraction of total sugar consumption. He criticised the absence of a coherent long-term nutrition strategy, warning that constant recipe changes erode UK competitiveness in export markets.

The Food and Drink Federation (FDF) struck a more conciliatory tone, noting that government had listened to industry concerns: “The new proposals take into account the costly and technically complex work companies must do to bring healthier products to market. Drinks manufacturers will continue conversations with government to ensure the right conditions for investment in healthier innovation.”

George Holmes, managing director of Aurora Capital, highlighted the impact on independent retailers: “Higher wholesale prices on popular mid-sugar drinks will squeeze already thin margins. If customers trade down to cheaper zero-sugar options, small shops could see a hit to their bottom line when every penny counts.”

Hospitality venues serving bottled soft drinks or ready-to-drink coffees will also face higher costs, Holmes added, warning that bigger chains may adapt faster than independents.

Health groups: “a sensible and consistent step”
Public health organisations strongly backed the extension. Katharine Jenner of the Obesity Health Alliance said: “Ending the exemption for sugary milkshakes is a sensible and long-overdue step to protect children’s health. The levy has already removed billions of teaspoons of sugar from the nation’s diet without harming industry growth.”

Barbara Crowther of Sustain’s Children’s Food Campaign agreed: “Companies who’ve already reduced sugar will now be rewarded, while those still stacking excess sugar into milkshakes must change their recipe or pay for the health harm caused.”

Dr Kawther Hashem of Action on Sugar welcomed the move but said government missed an opportunity by not lowering the threshold further to 4g per 100ml. She also called for a new upper tier targeting drinks with more than 10g of sugar per 100ml.

Other health voices, including Diabetes UK, the British Heart Foundation, Cancer Research UK, and the Association for the Study of Obesity, praised the consistency of applying the levy across all high-sugar drinks. They argued that reformulation remains one of the most effective strategies for reducing excess sugar intake at scale.

Youth campaigners also applauded the decision. Dev, a Bite Back activist, said: “The amount of sugar in milkshakes has been outrageous, and young people have been saying it for years. This is a really important step, but it can’t stop here. We need stronger advertising rules online, on TV and outdoors.”

The debate underscores the tension between public health ambitions and industry stability. While campaigners see the levy as proof that clear rules drive reformulation, manufacturers warn that piecemeal interventions risk undermining investment and competitiveness.

As Professor Nicola Heslehurst of the Association for the Study of Obesity noted, the changes provide consistency and sufficient time for adaptation. But industry leaders insist that only a stable, multi-year regulatory horizon will allow them to plan for growth rather than uncertainty.

With food inflation still high, the government faces pressure to balance health outcomes with economic realities. The extension of the levy to milkshakes may be a small step in fiscal terms, but it has reignited a much larger debate about the future of food regulation, innovation, and consumer choice in the UK.