The latest food and beverage industry news and trend analysis

The World Health Organisation (WHO) has issued a stern call to governments worldwide to significantly strengthen tax regimes on sugary drinks and alcoholic beverages. In two new global reports released today, the organisation warns that current weak tax systems are allowing harmful products to become increasingly affordable, directly fuelling a rise in noncommunicable diseases (NCDs) such as obesity, diabetes, and heart disease.

The reports highlight a disconnect between corporate profitability and public health costs, noting that while the combined market for these beverages generates billions in profit, governments capture only a minimal share of this value through health-motivated taxation.

The '3 by 35' Initiative

To combat this trend, the WHO has unveiled its "3 by 35" initiative. This strategic framework aims to increase the real prices of three specific product categories—tobacco, alcohol, and sugary drinks—by the year 2035.

The initiative is designed to counter the effects of inflation and income growth, which have rendered these products cheaper in real terms across most countries since 2022.

Regulatory Gaps and Loopholes

The WHO's analysis identifies significant structural weaknesses in existing global tax policies:

• Sugary Drinks: While at least 116 countries now tax sugary drinks, the levies are often "weak and poorly targeted." The median tax accounts for only about 2% of the retail price of a common soda. Furthermore, high-sugar categories such as 100% fruit juices, sweetened milk drinks, and ready-to-drink (RTD) coffees often escape taxation entirely.

• Alcohol: Although 167 countries levy taxes on alcohol, the global excise share remains low—median shares sit at roughly 14% for beer and 22.5% for spirits. Notably, wine remains completely untaxed in at least 25 countries, primarily in Europe, despite established health risks.

Dr Tedros Adhanom Ghebreyesus, WHO Director-General, framed taxation as a dual-purpose tool for health and economic stability: "Health taxes are one of the strongest tools we have for promoting health and preventing disease. By increasing taxes on products like tobacco, sugary drinks, and alcohol, governments can reduce harmful consumption and unlock funds for vital health services."

Dr Etienne Krug, Director of WHO’s Department of Health Determinants, highlighted the societal cost:

The WHO urges nations to redesign tax structures to automatically adjust for inflation, ensuring that health-harming products do not become more affordable over time.