AS local manufacturers get ready to take on the recently imposed Special Consumption Tax (SCT) on non-alcoholic beverages and sugary drinks, food and financial conglomerate GraceKennedy Limited said it believes that encouraging product reformulation would serve as a more effective way to promote healthier consumption habits rather than relying primarily on taxation.

Group CEO Frank James noted that while GraceKennedy, whose operation is heavily invested in the food and beverage sector, is not opposed to the new tax measure — he believes policies that encourage manufacturers to reduce sugar levels in beverages could produce stronger long-term health benefits.

“We are mindful of the Government’s drive around health but we have been doing that already. What we would certainly encourage is that the SCT is structured in a way that promotes reformulation — pushing manufacturers to lower the sugar content in their products,” he said while responding to questions during a recent investor briefing held by the company.

“The way it is structured today doesn’t really drive that as there isn’t a differential tax depending on the level of sugar… but I think that is something that would drive the behaviour we want, as we are mindful of the health considerations,” he added.

GK, as a manufacturer of sweetened beverages, said it has long been exploring ways to reduce sugar content while maintaining flavour and quality.

Reformulation in manufacturing — particularly within the food, beverage, and pharmaceutical sectors — refers to the process of altering the recipe, composition, or production method of an existing product. Companies typically undertake reformulation to improve nutritional profiles by reducing salt, sugar or fat. Often considered a form of “renovation” rather than new product development, the process enables companies to enhance product longevity while meeting new consumer preferences or regulatory requirements.

James, in noting that the more-than-century-old business has long been on a path to offer healthy options for its customers, said that long before the introduction of any SCT, GK had already been exploring ways to reduce sugar content while maintaining flavour and quality.

“This is not just in beverages, but across a number of other products within the group where we have tried to offer ‘better-for-you’ options so that our consumers have a choice,” he said.

The Government’s latest tax measure, introduced as part of efforts to help fund the national budget, has sparked mixed reactions. While health advocates have largely welcomed the move and some manufacturers have raised concerns about its effectiveness, critics have also argued that the levy unfairly targets the beverage sector and could disproportionately impact lower-income consumers.

Opposition spokesman on finance Julian Robinson, contributing to the budget debate in Parliament last Thursday, also spoke to the focus on reformulation as being a more effective approach than taxation.

“If the Government’s concern is about reducing sugar consumption and improving health outcomes, it has a more effective instrument available to it,” Robinson said.

“The Government could require local manufacturers to reformulate their products to reduce the sugar content and provide a time period within which to do so. That intervention would directly reduce the amount of sugar people consume,” he further stated.

The flat-rate levy of $0.02 per millilitre on beverages containing added sugar or sweeteners is expected to generate approximately $10.1 billion in revenue and will apply to both locally produced and imported beverages.

Introduced as a public health measure, the tax largely targets sodas, fruit-flavoured drinks, and other non-alcoholic beverages containing added sugar, caloric or non-nutritive sweeteners, whether carbonated or non-carbonated. The policy aims to reduce the consumption of sugary drinks, which are often linked to noncommunicable diseases such as obesity, diabetes and heart disease.

The levy is scheduled to take effect on May 1, 2026.