STANDING COMMITTEE ON FINANCE &  PORTFOLIO COMMITTEE ON HEALTH NATIONAL ASSEMBLY PARLIAMENT OF THE REPUBLIC OF SOUTH AFRICA

6 JUNE 2017

PUBLIC HEARINGS: HEALTH PROMOTION LEVY ON SUGARY BEVERAGES

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PIONEER FOODS Nutrition-based Food and Beverage leader in Southern Africa

2nd largest listed FMCG company in

South Africa

Operating in South Africa,

multiple other African countries

and selling products globally

50% market share, made with highest quality local and exotic

fruits

A pioneer in the unsweetened 100% fruit and vegetable juice industry for over

40 years

Our unsweetened 100% fruit and vegetable juice brands

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•  Unsweetened 100% fruit juice

•  Low Glycaemic Index (GI) on some variants

•  Contains valuable Nutrients, Essential Vitamins and

minerals found in fruit

•  No added sugars, preservatives or colourants

•  Fruit cells are available in 8 flavours (1L)

•  Pasteurised and sterile packaging to preserve product

integrity

•  Exported to more than 84 countries (Africa, Middle

East and Central Asia, Far East, Europe, North

America and the Caribbean and South America)

No added sugar or colourants

Flavours from citrus to smooth berry blends

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OUR FOOD POLICY

We recognise the value of a balanced and nutritious diet in preventing NCD’s and obesity and support Government’s objectives therein

•  High quality, safe and nutritious food products

•  Strictly adhering to applicable and prevailing health and safety regulations

•  Well-recognised household brands that form an integral part of many South African’s diets - fulfilling the responsibility it brings.

•  Diligently adherence to the protection of consumer rights as governed by the Consumer Protection Act

•  Comprehensive, transparent and accurate product labelling – empowering consumers to make informed decisions

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We acknowledge and recognise the problem of excess sugar intake in the diet of South Africans and proactively contribute to population-based health promotion. •  As a leading nutrition based food and beverage business, our commitment to health

promotion transcends beyond sugary beverages

•  We are focused on pre-emptive and proactive measures to achieve health promotion across our product range, not merely unsweetened 100% fruit and vegetable juice and beverages

  •  Thus the importance of recognising the value of a balanced and nutritious diet and those key

elements that may contribute to the wellbeing of our customers

Our customers demand healthier products and alternatives to SSBs •  Health remains amongst their top 3 concerns •  They are increasingly concerned about the health benefits of what they consume •  Demand for transparency and origin typifies the scrutiny of labels and ingredients

OUR MISSION: “ We believe in nourishing lives with trusted, well-loved brands, empowering families to get more out of life ”

CONTRIBUTING TO HEALTH PROMOTION EFFORTS

Exclusion of unsweetened 100% fruit and vegetable juice from the Health

Promotion Levy on Sugary Beverages

A TIMELY OPPORTUNITY ADDRESSING EXCESS SUGAR INTAKE

A timely opportunity in contributing to addressing the problem of excess sugar intake in South African’s diets and its impact on the prevalence of Non-Communicable Diseases (NCDs) and obesity. The health promotion benefits of unsweetened 100% fruit and vegetable juices recognises: •  The supportive role it plays in achieving health promotion, in

conjunction with a strong nutritional foundation built upon consumption of whole fruit and vegetables.

•  Complementing whole fruit intake into one’s diet: While unsweetened 100% fruit and vegetable juice is by no means a replacement for fresh whole fruit and vegetables; it plays a practical role in complimenting whole fruit intake into one’s diet.

EXCLUSION OF UNSWEETENED 100% FRUIT & VEG. JUICE

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NUTRITIONAL COMPOSITION OF 100% JUICE

~10% = natural (intrinsic) sugar The same sugars as in the whole fruit, in the same ratio

100% fruit juice is simply fruit that has been juiced

Fibre is less than whole fruit, so portion control important

~ 90% = water, vitamins, minerals and phytonutrients

Straight from the whole fruit from which it is squeezed Many proven health benefits:1 •  Cardiovascular health •  Bone health •  Brain health, cognition and aging •  Cancer and inflammation •  Bodyweight and insulin resistance

Each gram of sugar in orange juice is balanced with 20mg of micro-nutrients including Vitamin C, potassium and folate

1 UK Department of Health. Nutrient analysis of fruit and vegetables. Please refer to Annex for detailed scientific references

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MARKET SIZE & HEALTH PROMOTION OPPORTUNITY Unsweetened 100% Fruit & Vegetable Juices

3,8%

96,2%

Litres

Juice Other Beverages

Source: ACNielsen MAT March 2015; IRI MAT November 2016

•  3,8% of SA beverage market •  Contribution to health

promotion and complimenting whole fruit and vegetable in take, in a context of high prevalence NCDs and obesity outweighs market size.

An opportunity to continue with efforts to work with Government to contribute to population based health promotion interventions.

Our commitment to voluntary and statutory interventions to reformulate products across our range (not just beverages) includes: •  Deepening research and innovation in product reformulation •  Voluntary initiatives supporting public policy objectives •  Other non-fiscal, government and industry-led interventions to achieve population

health outcomes •  Marketing and advertising •  Packaging, labelling and nutritional guidelines and consumer disclosures •  Consumer education and awareness

Exploratory interventions: •  Reduced package sizes •  Reducing sugar content •  Lower kilojoule options •  Expanding vegetable juice range •  Enhancing consumer communication on key nutritional facts e.g. GI and serving sizes

COMMITMENT TO PRODUCT REFORMULATION SAVING A GENERATION. PROTECTING A NATION

EXCLUSION OF UNSWEETENED 100% FRUIT & VEG. JUICE

We remain fully committed to continue working with Government in any future review to consider the inclusion of unsweetened 100% fruit and vegetable juice in the Health Promotion Levy on Sugary Beverages, based on… •  Evidence based and comprehensive:

A)  Independent scientific research

B)  Socio-Economic Impact Assessment

C)  International benchmarking studies

D)  National Dietary Intake Study

•  Further consultation with all stakeholders, at NEDLAC and future Parliamentary processes

- representative across the industry value chain - Government (National Treasury, DoH, DTI, EDD and DAFF) - Labour (agricultural unions) and Civil Society

WORKING WITH GOVERNMENT EXPLORING POPULATION BASED HEALTH PROMOTION INTERVENTIONS

EXCLUSION OF UNSWEETENED 100% FRUIT & VEG. JUICE

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CONTRIBUTING TOWARD HEALTH PROMOTION INTERVENTIONS OVER THE LAST 3 YEARS (2014 – 2016)

Average sugar reduction of 30% across various dilutable beverages (nectars / squashes)  

Launched 4 reduced sugar ice-tea variants with 30% less sugar vs the standard range:  

Launch reduced pack size (cans) from 275 ml to 250 ml:  

Launch Diluted Juice (40 % less sugar vs. 100% juice)  

Lipton

Lipton

Ceres

Ceres

✔

✔

✔

✔

Fruitree, Wild Island, Carribean, Ceres

Nectar, Daly’s

EXAMPLE EMPOWERING CONSUMERS: REDUCING EXCESS SUGAR INTAKE

EXAMPLE EMPOWERING CONSUMERS: REDUCING EXCESS SUGAR INTAKE

EXAMPLE EMPOWERING CONSUMERS: REDUCING EXCESS SUGAR INTAKE

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LEVY ADMINISTRATION

While ring-fencing and targeted earmarking is not Government policy for levies and taxes, it is imperative to ensure that the targeted objectives of the Health Promotion Levy in conjunction with other non-fiscal complimentary interventions is achieving the desired objectives. This requires •  A flow through of funding allocation to dedicated and viable priority

interventions and programmes aligned with DoH policy, as approved through the annual budgeting cycle of Government and Parliament.

•  Robust Parliamentary oversight, monitoring and evaluation of the health outcomes, fiscal and economic impact of funded initiatives vs targets sets. Good governance and transparency.

This will contribute to assessing the efficacy and impact of targeted interventions and ensure good governance and transparency in the public finance management.

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CONCLUSION & RECOMMENDATIONS

1.   Exclusion of unsweetened of 100% fruit and vegetable juice at this point in time, should be supported in contributing to health promotion in conjunction with other voluntary initiatives being undertaken.

2.   Pioneer Foods is implementing voluntary health promotion initiatives: Product reformulation; Package resizing; Improved labelling and ingredient disclosers, Responsible marketing and advertising.

3.   Future reviews must be informed by scientifically evidence-based and comprehensive nutritional studies; International Benchmarking, Socio-Economic Impact Assessment and Consultation.

4.   Administration of the levy: •  Ensuring funding to dedicated and viable priority interventions and programmes aligned

with DoH policy approved through annual Budget cycle and Parliament. •  Robust Parliamentary oversight, monitoring and evaluation of health outcomes, fiscal

and economic impact vs. targets set.

THANK YOU