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Soft Drink Market in Australia: Reasons for and Against Sugar Tax

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Factors affecting supply and demand of soft drink in Australia

Lots of different factors affect the demand for soft drinks. The main ones are price, consumer lifestyles and taste and how healthy it is.

Price – if the price increases the demand decreases, this is the same for a product. As well as this, if the income of a certain household us lower the demand for wants decrease. This is the same vice versa.

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Lifestyles and taste – as the emphasis on meals shared between a family decreases and the desire for quick, convenience meals increases, the demand for SSD climb, especially ready to drink beverages such as iced coffee or tea. This means that people are looking for rejuvenating and filling drinks, encouraging the functional beverage categories,

Health – as more education arises on the damages long term consumption of sugary drink can cause, people are choosing diet drinks, often replacing sugar for stevia or other sweetening substitution. This is driving the market in both directions because soft drink manufactures are changing products for healthier versions as the markets change,

In indigenous households, things like age, the primary carer’s education, housing stability, remoteness and area-level disadvantage all affect demand. The amount of soft drink consumed is higher in older children (5–7 years old) in comparison to children less than 4 years old. There was no notable difference of consumption between genders. Children had even higher odds of consumption of SSB (sugar sweetened beverages) if one or both of their parents had lower levels of education, or if they experienced housing uncertainty in the past year. Compared to children living in the most rural areas, children living in low isolation and urban areas were pronouncedly at a higher chance to consume SSB.

A study from Cancer Council indicated that large consumption of soft drinks among Australian students years 8-11 is more common with males, and those with more weekly allowance.

Reasons for and against a tax


Studies have proven that these types of tax do reduce consumption. Mexico in January 2014, enacted a nationwide tax of 1 peso (6 cents AUD) on a liter on SSB. Sales fell by 5.5% by the first year, and 9.7% by the next. In March 2015, Berkeley, California, placed a tax of one cent (0.135 AUD) per ounce (28 grams) on sugary drinks. The study by researchers at the University of North Carolina and the Public Health Institute in Oakland, California, discovered that sales of sugary drinks fell by 9.6t% in a year. In Mexico and California, sales of bottled water rose after the fizzy-drinks tax came in.

Even if the tax is not very effective, the government can follow in England’s footsteps and spend the money raised on healthcare, especially the obese population. Things like, obesity prevention, nutrition education, advancing healthcare reform can be paid for by the tax. “Another area to which the revenue raised by a soda tax might go”, as suggested by Mike Rayner of the United Kingdom, “is to subsidize healthier foods like fruits and vegetables”.

This tax is a very effective way to increase education on this topic. If the government puts this tax in place, it encourages schools and kids to learn about the dangers of over-consuming soft drinks. Just as taxes on tobacco have helped people to learn that it is bad for your health, the same will apply for the sugary drinks tax.


This tax is a regressive tax. This means that it hits poor people the hardest. This along with the fact that statistics shows the demand for SSB is highest in the lower socio-economic areas means that poor people will be the most affected by this tax.

This kind of tax infringes people’s right to choose what is good for themselves. It is the people choice to decide what food you put into your body. This is called civil liberties, the state of being subject only to laws established for the good of the community, especially with regard to freedom of action and speech.

Taxing soft drink beverages actually may not provide the health development hoped for in Australia because intake of SSBs is declining.


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