UK expands sugar tax to target bottled coffee and milkshakes

LONDON — The United Kingdom will expand its sugar tax to include dairy-based drinks and milk alternatives starting in 2028, part of a renewed government effort to curb rising obesity rates.

Health and Social Care Secretary Wes Streeting announced the policy change before the House of Commons, confirming that pre-packaged items such as milkshakes, sweetened coffees, and dairy substitutes will soon be subject to the levy. The new rules are scheduled to take effect on Jan. 1, 2028.

Formally known as the Soft Drinks Industry Levy (SDIL), the tax incentivizes manufacturers to reduce sugar content in their products to avoid the surcharge, which often leads to higher retail prices. Government officials said the measure specifically aims to address childhood obesity.

In addition to expanding the scope of the tax, the government plans to tighten existing sugar thresholds.

Since its implementation in 2018, the sugar tax has successfully driven a 46% reduction in the total sugar content of affected soft drinks. However, British health officials noted that overall obesity rates in the U.K. have yet to show a significant decline.

The British government’s decision to expand its sugar levy signals a doubling down on "nudge" public health policy, opting for fiscal levers over outright bans to reshape market behavior. By targeting milk-based drinks—which previously enjoyed exemptions due to their calcium content despite high levels of added sugar—policymakers are moving to close a significant regulatory loophole.

The efficacy of the levy to date remains a study in contrasts. From a supply-side perspective, the policy is a resounding success in industrial reformulation; the threat of taxation forced manufacturers to strip 46% of sugar from taxed beverages. However, the ultimate metric of success—a reduction in national obesity rates—remains unmet. The data suggests that while fiscal tools can effectively drive product innovation, they are not a silver bullet for complex public health crises, which require a more holistic suite of interventions spanning education, lifestyle, and food security.

The move into the dairy category indicates an increased regulatory appetite for navigating complex nutritional trade-offs, specifically the balance between essential nutrients and caloric density. This shift aligns with a broader global trend: governments are increasingly willing to intervene in food markets to mitigate the escalating costs of chronic health conditions. Moving forward, the UK’s experience will serve as a bellwether for whether fiscal "nudges" can be scaled into comprehensive structural changes in public health.

While these specific regulations are currently limited to the UK, the growing trend of taxing sugary beverages is a development that Vietnamese-American food and beverage businesses should monitor closely. Many community staples—such as cà phê sữa đá, sweetened teas, and the bottled nước sâm found in phở restaurants and Little Saigon supermarkets—feature high sugar content. If similar policies were to be adopted across major U.S. cities or states, they would directly impact production costs and retail prices for these small businesses.