Sugary Drink Tax: Implications for F&B and FMCG Business

The sugary drink tax is a public health policy aimed at reducing sugar consumption and curbing lifestyle-related diseases such as obesity and diabetes. Across the world, governments are increasingly implementing these taxes to discourage excessive sugar intake and generate additional revenue for healthcare systems. 

In Indonesia, the government has officially announced its plan to tax sugary packaged beverages starting in July 2025. This move is in response to a surge in diabetes and other non-communicable diseases associated with high sugar intake.  

The tax is expected to significantly impact Food and beverage (F&B) businesses, Fast-Moving Consumer Goods (FMCG) manufacturers, and importers of sweetened packaged drinks. 

This article explores the implications of the sugary drink tax on these industries, government regulations, and business adaptation strategies. 

Understanding the Sugary Drink Tax in Indonesia 

The sugary drink tax is a form of excise tax imposed on beverages containing high levels of added sugar. The primary objectives of this tax include: 

• Encouraging Healthier Consumption Habits: Higher prices discourage excessive sugar consumption. 
• Reducing Healthcare Costs: Lower sugar intake can lead to reduced cases of obesity and diabetes. 
• Increasing Government Revenue: The tax provides additional funds to invest in healthcare programs. 

Indonesia’s Sugary Drink Tax Plan 

Indonesia plans to enforce the tax on sugary products in July 2025 as part of a broader strategy to tackle rising diabetes cases. Key details include: 

• Scope of Taxation: The tax applies to packaged sweetened beverages, including carbonated drinks, fruit juices with added sugar, energy drinks, flavored milk, and instant coffee or tea products. 
• Tax Rate: The exact tax rate has yet to be finalized, but it is expected to follow similar structures in other ASEAN countries. 
• Expected Revenue & Impact: The government anticipates increased tax revenue while encouraging consumers to opt for healthier alternatives. 

International Examples of Sugary Drink Tax 

Many countries have already implemented sugar taxes with varying degrees of success: 

• Mexico: A 10% sugary drink tax led to a 7.6% decrease in sugary beverage sales within the first two years. 
• United Kingdom: The Soft Drinks Industry Levy (SDIL) resulted in manufacturers reformulating their products to reduce sugar content. 
• Thailand & the Philippines: Both countries adopted similar excise taxes, significantly impacting consumer behavior and product innovation. 

As Indonesia follows suit, businesses in the F&B and FMCG industries must prepare for regulatory adjustments and market shifts. 

Government Regulations & BPOM Compliance for Sugary Beverages

The Indonesian government has introduced GR No. 28/2024 to regulate the sugar, salt, and fat content of processed foods and beverages. This aims to improve public health by reducing the risk of diabetes and obesity. 

Limits on Sugar, Salt, and Fat 

The government will establish maximum sugar, salt, and fat thresholds in processed and ready-to-eat foods. These limits will be set based on health risks and international standards. To continue operating, businesses such as food manufacturers, importers, restaurants, catering services, and food vendors must comply with these limits. Any food product exceeding 50g of sugar, 2,000mg of sodium, or 67g of fat per serving will be considered excessive. 

Banning Harmful Ingredients 

Certain ingredients that increase the risk of non-communicable diseases (NCDs) may be restricted or banned in processed foods and beverages. This rule applies to all businesses producing, importing, and distributing these products. More detailed guidelines will be introduced in future ministerial regulations. 

Possible Excise Tax on High-Sugar Foods 

The government may introduce an excise tax on processed foods with high sugar content. This will likely lead to higher retail prices, which may push businesses to reformulate products or explore alternative sweeteners to maintain sales and customer demand. 

Mandatory Nutrition Labels 

All processed and ready-to-eat foods must include nutrition labels detailing sugar, salt, and fat content. This requirement applies to all producers, importers, and distributors, expanding beyond the previous regulations that only applied to large-scale businesses. Labels must be displayed on packaging or informational media, such as online product descriptions or menus. 

Advertising & Sales Restrictions 

Advertisements for high-sugar products will face restrictions, especially when targeting children or vulnerable groups. Additionally, certain high-sugar foods may be banned from being sold in schools, hospitals, and healthcare facilities to protect public health. Promotions and sponsorships for these products may also be regulated to prevent misleading health claims. 

Impact of the Sugary Drink Tax on Key Industries 

The sugary drink tax will significantly affect Indonesia’s Food and beverage (F&B) industry, Fast-Moving Consumer Goods (FMCG) sector, and beverage importers and distributors. Businesses must adjust to higher costs, changing consumer preferences, and stricter regulations. 

Food & Beverage Industry 

The F&B industry will face higher production costs as companies pay taxes or reformulate products to reduce sugar content. Some businesses may pass the tax burden to consumers, leading to higher retail prices and a possible decline in sugary beverage sales.  

Restaurants, cafes, and convenience stores may see shifts in consumer demand, with more people choosing lower-sugar options. To remain competitive, businesses must introduce healthier drink alternatives or use natural sweeteners. 

Fast-Moving Consumer Goods (FMCG) Sector 

The FMCG sector, including beverage manufacturers and distributors, must adjust its supply chains to comply with new regulations. Companies will also face marketing restrictions, requiring them to change their advertising and promotional strategies.  

Additionally, the tax will increase retail prices for sweetened packaged drinks, possibly affecting consumer purchasing habits. Businesses must invest in product innovation and regulatory compliance to stay ahead in a changing market. 

Beverage Importers & Distributors 

Importers of sweetened packaged beverages will experience higher import duties and stricter regulations. Products must meet BPOM registration requirements, which could delay market entry and increase costs.  

With local brands reformulating to meet MBDK tax requirements (Minuman Berpemanis Dalam Kemasan), imported sugary drinks may become less competitive. To maintain their market presence, importers must review pricing strategies, ensure regulatory compliance, and consider offering healthier beverage options. 

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Prepare for the Sugary Drink Tax with InCorp 

Indonesia’s sugary drink tax is a major regulatory change impacting the F&B and FMCG industries. While the policy aims to promote public health, it also brings challenges like higher production costs, shifting consumer demand, and stricter compliance rules. Businesses must adapt to remain competitive. 

For businesses needing support with compliance and market entry, InCorp Indonesia (an Ascentium Company) provides expert assistance: 

• Food and Beverage Registration: Helping businesses register F&B products smoothly. 
• Product Registration and Import: Ensuring compliance for imported and locally produced beverages. 

Navigate these changes efficiently and ensure continued success in Indonesia’s evolving market by completing the form below.