Budget Shake-Up: 'Milkshake Tax' Reform Puts UK Jobs at Risk
The chief executive of a major British drinks manufacturer has issued a stark warning that Chancellor Rachel Reeves' rumoured changes to the so-called 'milkshake tax' could force his family-run business to move its entire production out of the United Kingdom. Steve Perez, who leads Global Brands, the company behind popular drinks like Hooch and VK, said the potential adjustment to the Soft Drinks Industry Levy would be the third major change to sugar rules in under a decade, creating an unstable environment for investment.
A £10 Million Pound Problem
The core of the issue lies in the government's plan, expected in the upcoming Budget, to lower the sugar threshold for the levy. The proposal would see the limit reduced from 5g of sugar per 100ml to 4g. While this may seem a minor technicality, Perez explained that for his business, it translates to an additional £10 million in costs every year.
He stated that this comes on top of tax hikes from last year's Budget, which he said are already costing his firm an extra £1 million annually. This constant shifting of the goalposts, he argued, poses huge operational challenges, forcing companies to either reformulate recipes repeatedly or face profitability-crushing fees.
The Impossible Choice: Sweeteners, Costs, or Relocation
Faced with the proposed tax change, Perez outlined three bleak options for his Derbyshire-based business. The first involves swapping natural sugar for artificial sweeteners to avoid the levy. However, this could damage international sales, particularly in the growing US market, and have a £10 million impact on revenue, not to mention harming British sugar beet suppliers.
The second option is to create a separate, UK-only recipe while maintaining the original for export markets. Perez warned this would incur significant additional costs, undermining the point of avoiding the tax. The third, and most drastic, choice would be to move entire production out of the UK.
"As an independent, family-run business, this would be devastating for local employment and goes against everything we stand for," Perez said, emphasising his company's commitment to British manufacturing. He expressed frustration that the government is penalising businesses known for quality and natural ingredients, rather than championing them.
Perez concluded that while the drinks industry is not opposed to improving public health, it desperately needs clarity, consistency, and collaboration from the government. He fears that this latest proposed change could be the tipping point that makes the UK an unviable place for many producers to operate.
