Last year, in what is a world first, Colombia introduced a tax on ultra-processed foods (UPF).
The law, which went into effect Nov. 1, imposes an initial 10% tax rate on certain foods, expanding to 15% in 2024 and 20% in 2025.
Even in its early stages, it turns out that the tax is already affecting UPF’s sales. According to knowledge consultancy Kantar, at the end of 2023, admissions were down 5% from 2021 levels.
The most common definition of ultra-processed foods comes from Nova, which divides the point of processing into four groups: raw and minimally processed foods; processed culinary ingredients; processed foods; and ultra-processed foods.
But Colombia does tax all ultra-processed foods according to this classification system. Instead, the government levies the tax on ultra-processed “junk food” products.
An increase in UPF intake in Colombia is linked to an increase in nutrient intake related to chronic diseases. According to research, reducing UPF intake is a potentially effective way to reach nutritional goals for chronic disease prevention.
These are explained as edibles formulated from foodborne ingredients and as additives containing added sugars, sodium, and saturated fats that exceed thresholds for those nutrients.
For sodium, the threshold is >1 mg sodium per 1 kcal and/or >300 mg sodium per 100 g. For loose sugars, the threshold is >10% of total energy; And the saturated fat threshold is also >10% of total energy.
So, which food categories are affected, and affected, by Colombia’s UPF tax?
Those covered by the new law are dairy products with added sugar; sausages and cold cuts; confectionery; Snacks; bakery products; breakfast cereals; canned topping and vegetables with added fat, sugar, or salt; and spreads, condiments, and dressings.
Traditional Colombian foods are exempt, adding dulce de leche; a salami-like sausage known as a salami; and a water and sugary dessert called a wafer.
Although this tax came into effect relatively recently, it is already affecting consumer behavior.
From November 1 (when the tax was introduced) to the end of December 2023, the consumption of ultra-processed foods increased. According to John Studerus, head of complex analysis at Kantar’s Worldpanel department in Colombia, consumers spent 14% more in these two months. was about UPFs being “unhealthy” compared to last year.
“This contrasts with a 9% increase in disbursements for other categories that were taxable. “
Excluding expenses, sales volume decreased by five percent through 2021, with some categories impacted. Volume fell by between five and 20% for the three maximum categories affected: liquid tea, flavored milk and chocolates.
For Studerus, these effects recommend that families are already adjusting their purchasing decisions with spending in mind. On the one hand, they taxed the frequency of product purchases, which translated into a 6% drop in one quarter.
“Conversely, some consumers have chosen to migrate to less expensive brands, which has already allowed them to increase their market share by 1%. “
Ultra-processed sugary drinks are also on the Colombian government’s blacklist. From November 1, 2023, they will be subject to a new tax.
The tax rate differs depending on sugar content and will be accumulated in three stages from 2023 to 2025. The rate will be updated based on inflation starting in 2026.
Exempt products include tap water, 100 percent fruit or vegetable juices, and infant formula.
Such a tax can also have a negative effect on healthier, non-ultra-processed foods. Consumers could choose to avoid purchasing such products duty-free in order to purchase taxed products.
“These implications suggest that the industry wants to understand the express dynamics of each category and anticipate the effect of tax increases in the coming years,” says Kantar’s Studerus.
Although there is no UPF tax in Europe lately, ultra-processed foods are on the radar of governments.
Several countries around the world explicitly refer to “ultra-processed foods” in their national nutritional guidelines. These include Belgium, Brazil, Ecuador, Israel, Maldives, Peru and Uruguay.
Belgium, for example, makes explicit reference to “ultra-processed foods” in its national nutritional guidelines. “Most ultra-processed foods do not update staple foods under any circumstances,” according to the Belgian government.
French nutrition consultants are proposing to restrict ultra-processed foods, and Portugal needs its population to minimise the intake of “unhealthy foods” (ultra-processed foods and foods included in its food advice round) until 2030.
The U. K. is another country helping to keep a close eye on ultra-processed foods, but government scientists are convinced that the quality of many UPF studies linking intake to poor fitness outcomes is up to par.
UPF skeptics are cautious. Earlier this year, Henry Dimbleby, a former non-executive board member of the UK’s Department for Environment, Food and Rural Affairs (Defra), proposed a total ban on the advertising of ultra-processed foods and called for “warning labels” to be placed on UPF products.
As for what Europeans themselves think about UPF, recent studies suggest that, at best, ultra-processed foods are bad and destructive to the environment. At the same time, confusion persists; What “ultra-processed foods” means to one customer may not be what it means to another.