Cup tax: UK industry warns of the impact of potential "latte levy"

18 Dec 2017 --- As Christmas fast-approaches, new research indicates that coffee sales are cushioning local retailers through the festive season but this life-line is threatened by a potential latte levy. With October’s retail sales falling at the quickest rate since 2009 – the height of the financial crisis – (according to the CBI Distributive Trades Survey) and online sales volumes expanding, high street retailers are feeling the pinch.  Data from Retail Futures shows, in the six years between 2012 and 2018 some 22 percent of shops will have closed.

Against this backdrop of doom and gloom, new evidence, commissioned by the UK’s market-leading paper cup manufacturers, suggests that our habit of popping out for a coffee on-the-go is fuelling wider consumer spending on the high-street.

Three quarters (75 percent) of Britons said they were likely to pop into other shops on their high street when they went to get a coffee or hot drink. On average, they visit two other shops spending around £15 but 7 percent visited many more (an average of five). 

However, indications are that introducing a tax on coffee cups will significantly deter shoppers. Over two in five Britons polled said a tax on cups would affect how often they stop for a coffee and over a third said that this would negatively affect how often they visited their local high street.

Men were more likely than women (36 percent / 32 percent) to say the proposed tax would negatively affect how often they visit their local high street.  

Neil Whittall of Huhtamaki and a member of the Paper Cup Alliance said: “Paper cups are the most sustainable and safe solution for drinks on-the-go. Consumers want to do the right thing and we’re taking steps to support that through new infrastructure and country-wide initiatives. Taxing the morning coffee run will not address the lack of infrastructure but it will hurt consumers and impact already struggling high streets.

“We are committed to increasing recycling rates. Over 3,000 new recycling points were created this year and a new country-wide initiative is launching in January increasing options for consumers to recycle.”

Commenting on the findings Chris Stemman, Executive Director of the British Coffee Association said: “These figures are no surprise. Independent cafes and coffee chains are playing an important part in regenerating local high streets and shopping centers, providing focal points for communities. In tough and uncertain times a cup of coffee is an affordable treat. A cup tax is a real threat to local economies and doesn’t solve this as a long-term sustainability issue that needs to be dealt with through innovation, recyclable packaging, and recycling processes.” 

People in the North East are hitting the shops hardest with 88 percent of those polled visiting other shops when out for a coffee whilst people in the West Midlands spend the most (over £20 per visit).

On average consumers are visiting their local high street twice a week with over half (55 percent) saying they normally grab a coffee while they are there. Younger people (25-35) spent the most, averaging almost £20.