Senior sources within the Irish Government have revealed that a sugar tax will be announced in next month’s budget, following similar moves in the UK. This raises the likelihood that sugary drinks taxes could be introduced in other nations around the world, as the debate surrounding the health effects of sugary drinks gains momentum and health lobbyists intensify their campaigns against fizzy drinks.
This will significantly impact sales and profitability at drinks companies, forcing them to find ways to stem losses.
Trends for fizzy drinks sales have all pointed downwards, with a 5% and 10% drop in sales in Europe and the UK in recent years. Whilst it has been suggested that the Irish sugary drink tax will only come into effect in 2018, around the same time as the tax in the UK, drinks companies are already under pressure and will be looking for ways to cut losses and make savings across their whole operations.
InfinityQS suggests that as these taxes eat into drinks companies’ profits, and correspondingly into those of packaging firms and raw materials suppliers, so it will become imperative for them to use quality management systems to drive down the costs of manufacturing and packaging.
The company said in a statement: “Whatever one’s personal inclinations on the fizzy drinks debate, it is becoming increasingly clear that drinks companies will have to swallow these kind of sugary drink taxes in at least some of their major markets or invest in new product development (NPD) to avoid being subject to the taxes. Either way, money is being lost – and these companies are looking for ways to recoup these losses.
“Fortunately, the manufacturing process offers ways for organisations to safeguard profit and keep potential losses to a minimum. Product overfill is a great example of an area where drinks companies could quite literally be pouring money away during the manufacturing process. Whilst many organisations are afraid of underfilling for fear of fines from oversight agencies, even a very small overfill across production lines could be costing a company millions every year. This amounts to an organisation unnecessarily giving away product, yet many remain unaware of these opportunities for reducing losses.
“Deploying an effective quality management system can shine a revealing light on manufacturing processes, identifying errors and areas where profit is being steadily thrown away. There is a ‘long-tail’ of possible manufacturing errors in the drinks industry that seem individually insignificant but actually accumulate into large losses. If an organisation uses an effective quality management system to attack these errors, it could potentially generate massive savings.
“The drinks sector is already being pressed by falling consumer demand for fizzy drinks. Although these sugary drinks taxes will likely only come into force in 2018, drink companies will already be looking for ways to protect their profits and minimise losses. The manufacturing process represents low hanging fruit in this regards – an area where much can be lost through neglect and ignorance, and much can be saved by the judicious application of quality management systems. It is imperative that drinks companies implement quality management systems to plug these profit leaks and safeguard their future financial health.”
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