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Brief №1
UAE / GCC · 07 Feb 2026

Market Signal · Pricing & Portfolio

The UAE just rebuilt its sugar tax. The reformulation clock starts now.

For beverage brands operating in the GCC, this isn't a compliance update — it's a forced portfolio rethink. The UK has run this exact playbook since 2018. Eight years of data tells you what happens next.

Dominique Silvarelli Founder & Managing Director, Progcess Partners

№1

ProgcessPartners

02 / 07
The decree

The decree · 1 January 2026

The UAE swapped flat-rate excise for a tiered tax on sweetened beverages.

Under Cabinet Decision No. 52 of 2023 — implemented by Ministerial Decision No. 12 of 2025 and effective 1 January 2026 — the UAE replaced its flat 50% excise on sweetened beverages with a tiered system based on grams of sugar per 100ml. The structure is identical to the UK SDIL launched in 2018.

50% excise on drinks at or above 8g sugar per 100ml. 20% on drinks between 5 and 8g. 0% on drinks below 5g. Artificially sweetened categories follow a parallel logic.

For any beverage portfolio with UAE exposure — and increasingly any GCC-wide portfolio — this is the most consequential portfolio policy decision of the decade.

50%

excise on drinks
≥8g sugar / 100ml

20%

rate on drinks
5–8g / 100ml

on drinks
under 5g / 100ml

UK SDIL outcome, 2015 → 2024

Eight years after the UK ran the same playbook. Source: HMRC SDIL review 2024.

Sugar reformulated out Tax avoidance via reformulation

ProgcessPartners

03 / 07
The precedent

UK SDIL · brand migration

Sugar content per 100ml — before → after

SOURCE · HMRC SDIL REVIEW 2024 · DICKSON ET AL. 2023

"Companies rarely reformulate existing products — they develop new low-sugar alternatives alongside them." — Lauber et al., UK SDIL marketing study, 2022

The precedent · UK SDIL, 2018

The UK ran this exact playbook in 2018. The data tells you what happens.

47% sugar reduction in 8 years. HMRC's 2024 SDIL review: average sugar content in scope drinks fell 47%; 65% of brands above 5g/100ml reformulated below the threshold within four years. The tier line, not the tax revenue, did the work.

Reformulation

Reformulation drove 83% of the change. Dickson, Gehrsitz & Kemp (2023, IZA DP 14528) found that 83% of the calorie reduction from the UK SDIL came from reformulation — not consumer substitution, not price-driven demand reduction. The tax does its work upstream.

Evidence

But not every brand reformulated. Fanta, Sprite, Pepsi, Irn-Bru: reformulated below 5g. Coca-Cola Classic, Red Bull, Monster: kept the recipe, paid the tax. The split — and the strategic logic behind it — will repeat in the GCC.

Choice

ProgcessPartners

04 / 07
Your position

Your position · 2×2 read

Where you sit on the tier line determines your next 8 years.

Map your beverage portfolio on two axes: average sugar (g/100ml) — where the new excise lives — and brand equity, your ability to pass cost through. The top-right quadrant — strong brand, heavy sugar — is the trap. Coca-Cola Classic, Red Bull and Monster all live there. They paid the tax and held the line on equity grounds. Your equity has to be that strong.

← LOW AVG SUGAR (g / 100ml) HIGH →

Quadrant A · Light, Strong

Diet variants & light brands

Diet Coke, Pepsi Max, Coca-Cola Zero. Already below 5g. Use the tier gap to take share — not margin — from heavier competitors who'll cost more on shelf.

Quadrant B · Most exposed ⚠

Hero brands, heavy sugar

Coca-Cola Classic, Red Bull, Monster. The trap. Reformulating breaks the brand promise (see: New Coke, 1985). Paying the tax is defensible if equity is strong enough.

Quadrant C · Light, Weak

Mid-tier light variants

Already below 5g but undermarketed. The new tier line is a free marketing wedge: 'lighter than the leader, lower price.' UK lesson: this is where mid-tier brands gained share post-2018.

Quadrant D · Heavy, Weak

Heavy sugar, weak equity

Hardest position. No equity to absorb a 50% excise; no R&D to reformulate fast. The UK SDIL killed dozens of small full-sugar SKUs in this corner. Restructure pack-price or accept exit.

LOW ← BRAND EQUITY (PRICING POWER) → HIGH

ProgcessPartners

05 / 07
The playbook

The playbook · Three moves this quarter

Don't wait for the next budget cycle. Three moves any beverage leader can run now.

Drawn from the UK SDIL playbook (2016–2018 pre-implementation window) and McKinsey's 2014 obesity report. None require a global mandate. All can land in Q1.

Audit every UAE SKU's sugar content per 100ml — today. You can't manage what you can't see. Most beverage portfolios don't have a single file with verified sugar grams per 100ml across every UAE SKU. The Federal Tax Authority will need this anyway. Build it in two weeks. Margin-mix beats margin per SKU when the spread is visible.

Diagnostic

Run a reformulation P&L on your top 5 references. For each: cost to move 1g of sugar down × excise saved at the new tier × velocity impact. McKinsey's 2014 obesity report showed reformulation delivers 8x the consumption impact of a flat tax. Two of your top five will pay back inside 12 months. The other three tell you where NOT to invest.

Finance

Stress-test your GCC pricing model assuming KSA follows in 2027. ZATCA has signalled intent to follow with a tiered model. If Riyadh moves with similar thresholds, your unified GCC pricing model breaks. Build the scenario now: what happens to KSA margin if the same logic lands. Decisions taken in 2026 should be GCC-coherent, not UAE-only.

GCC

ProgcessPartners

06 / 07
30 · 60 · 90

30 / 60 / 90 · The UK pre-implementation playbook

90 days from confusion to clarity. The UK gave brands two years; you have one quarter.

Start narrow, learn fast, then scale. Don't try to reformulate everything. The UK winners reformulated 60% of the volume-weighted portfolio first; flagship and niche followed in year two.

— 30 DAYS

Diagnose

›Pull sugar grams per 100ml on every UAE SKU
›Run the 2×2 map: where each SKU sits on tier line × brand equity
›Quantify margin at risk per SKU at new excise rates

— 60 DAYS

Decide

›Pick 2–3 references where reformulation pays back inside 12 months
›Brief R&D on formulation timeline (sweetener swap, fibre)
›Pre-test taste profile in 2 controlled outlets

— 90 DAYS

Execute

›Begin formulation work on top 2 candidates
›Lock pricing scenarios assuming KSA follows H2 2027
›Build the GCC-coherent global P&L narrative

"The window before reformulation becomes the new normal is the window. Use it."

ProgcessPartners

07 / 07
Let's talk

The bottom line

Tax tied to sugar grams isn't a regulatory footnote — it's the lever that resets every beverage portfolio in the GCC.

Eight years of UK data make the next 24 months in the UAE predictable. The brands that reformulated by 2018 took share. The brands that hesitated, didn't. Coca-Cola Zero Sugar grew 35% in the UK between 2018 and 2023 while full-sugar Coca-Cola declined 15%. That wasn't a marketing success — that was the tier line doing structural work, while one product absorbed the levy and the other captured switchers. Same parent. Different tier. Different outcome.

If you're sitting on a Quadrant B beverage portfolio in the UAE — strong brand, heavy sugar — the next 90 days set up the next 8 years. DM me directly. I run interim COO mandates (4–8 weeks) on portfolio reformulation, tier-driven repricing, and GCC scenario planning out of UAE and Singapore.

Dominique Silvarelli

Founder & Managing Director, Progcess Partners · UAE & Singapore
dsilvarelli@progcessconsulting.com
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1 / 7

The UAE just rebuilt its sugar tax. The reformulation clock starts now.

On 1 January 2026, the UAE replaced its flat 50% excise on sweetened beverages with a tiered system based on grams of sugar per 100ml. 50% on drinks ≥8g; 20% on 5–8g; 0% below 5g. The structure mirrors the UK Soft Drinks Industry Levy launched in 2018.

The UK ran this exact playbook. Eight years on, average sugar in scope drinks is down 47%; 65% of brands reformulated below the 5g threshold; reformulation drove 83% of the calorie reduction. The tier line did the work — not the tax revenue. The UAE FMCG playbook for 2026 is sitting in 2018–2024 UK trade data.

Reformulation drove 83% of the change. And if the model travels to KSA or Qatar — and these things tend to — your GCC pricing architecture has to be coherent across markets, not arbitraged between them.

If you're scoping a UAE entry and want to pressure-test your pricing model before you commit, DM me.