JD Wetherspoon has increased the price of sugary soft drinks like Pepsi by 10p ahead of the new sugar tax which the pub firm said would cost it £3m this year.
The chairman of JD Wetherspoon, Tim Martin said drinks manufacturers were passing on the cost of the sugar which comes into effect next month.
“Suppliers are passing it on to us and we are passing it on to the customer,” said Martin, who complained the levy was adding to the financial pressures faced by pubs and restaurants. “£3m is the cost of the extra tax to the business whether or not we pass it on to customers.”
Martin said the company faced rising costs in the second half of its financial year due to business rates and higher payroll costs. “It’s an era of rising taxes for pubs and restaurants which is making life more difficult,” he said.
Martin could not resist a dig at Jamie Oliver who campaigned for the introduction of a sugar tax but more recently has been closing branches of his struggling restaurant chain Jamie’s Italian. “Jamie Oliver’s sugar tax – which he got us to pay but can’t afford to pay himself – is costing us £3m, a bit more than the increase in business rates,” Martin told the BBC’s Today programme.
His comments came as JD Wetherspoon reported pre-tax profits up by a fifth to £62m on sales of £830.4m in the six months to 28 January. Like-for-like sales rose 6.1% during the period although that figure had slowed to 3.8% over the past six weeks.
The sugar tax – designed to help combat child obesity – was announced by then chancellor George Osborne in 2016.
Given the goal was to cut sugar consumption, Osborne gave drinks-makers time to alter their recipes but as of April they will be taxed at 18p per litre on drinks containing 5g of sugar or more per 100ml, or 24p per litre if the drink has 8g of sugar or more per 100ml.
Earlier this week the Office for Budget Responsibility (OBR), the government’s independent budget watchdog, said the amount the sugar tax was expected to raise for government coffers had more than halved due to the number of manufacturers that had reduced the sugar content of their drinks. The OBR has pencilled in £240m a year, less than half the £500m predicted back in 2016.
“The sugar tax has been a great success and it has not even come in yet,” said Duncan Brewer, a partner at consultancy firm Oliver Wyman. “Consumers are more aware of sugar and there have been a raft of reformulations. It’s a great example of a relatively benign intervention.”