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July 9, 2008

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• Featured Book
• Featured Market Research
• Featured Product
• News Headlines
• New Companies

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In the UK the High Court ruled that Pringles are not crisps. Procter and Gamble successfully challenged the ruling of a VAT (tax) tribunal that Pringles should be standard-rated at 17.5 per cent as the product fell within the definition of "potato crisps, potato sticks, potato puffs and similar products made from the potato, or from potato flour, or from potato starch".

Good for Procter and Gamble, who can save a lot on tax as a result of this verdict. Although not all may be gain: Pringles definitely had the image of a potato snack in a cute saddle form and a unique packaging. What happens to that image when consumers read that Pringles  are “made from potato flour, corn flour, wheat starch and rice flour, together with fat and emulsifier, salt and seasoning, with a potato content of around 42 % only”.  These are all perfectly fine ingredients, but a bit confusing for the consumer maybe?

In the UK most foods are subjected to zero VAT, but in the tax law that was formulated in 1994, a number of “luxury” products are specifically excepted. I did some digging in the tax code – curious how a difference in composition, replacing potato flour by flour from other sources, could make such a difference. This is the full article relevant for savoury snacks:

“ Any of the following when packaged for human consumption without further preparation, namely, potato crisps, potato sticks, potato puffs, and similar products made from the potato, or from potato flour, or from potato starch, and savoury food products obtained by the swelling of cereals or cereal products; and salted or roasted nuts other than nuts in shell.”

Nowadays I do not consider savory snacks a particularly luxury food. What pops up in my mind thinking of luxury food: Fresh Strawberries at Christmas. Exotic fruits, lobster, exquisite coffee, caviar, organic New Zealand lamb. You guessed it, these all go for the zero tax category in the UK.

I can see that the entire savory snack sector could be defined as a luxury food and would require the 17.5% tax. But singling out the potato?!  Interesting sources of future discussions can be sweet potato snacks, cassava crisps, rice crisps and the question ”is puffing and extrusion of cereals different from swelling cereals”.

It is clear that the (snack) food technologists have far outsmarted the lawyers. Nevertheless, the lawyers are probably going to make the money.

Here is my suggestion for the crisp manufacturers in the UK: Stop manufacturing regular crisps! From now on, only sell crisps that require reheating in the microwave prior to consumption! Indeed, these could go in the 0 % tax category!

All kidding aside: singling out the potato ingredient in this tax code does not make much sense looking at today’s snack isle. Maybe something to correct in the “year of the potato”?

Enjoy reading,

Paul van Eijck

Featured Market Research Report

Select the Datamonitor Savory snack market research report that is right for you.

First time buyers:
If you need a description of the market for savory snacks for one country, we recommend the industry guide "Savory snacks in China" or replace China with the country you are interested in.
These reports contain:

• An executive summary.
• Data on value, volume and segmentation
• A write up on the industry's prospects, competitive landscape and leading companies, including market share.
• A five year forecast of the industry
• Demographics

If you are interested in multiple countries: These reports are also available for regions or globally and contain similar description but on regional or global level. Regional or global reports do not contain all the breakdowns by country.
If you need the information broken down by country for multiple countries, you should check if you can save money by buying "Savory snacks: Global industry guide"  This is a collation of multiple country reports.

You want even more details:
If you need more details for one country, you can consider the databook "Savory Snacks in China to 2010" or replace China with the country you are interested in.

These databooks include:

• market value, volume, expenditure and consumption data by market, segment and sub-segment
• company and brand share data by category as well as distribution channel
• market value segmentation by demographic and socioeconomic group

If you need this information for multiple countries, you may be able to save money by choosing a regional  report (e.g. Savory Snacks in North America to 2010) or the global report: "Global Savory snacks market to 2010"
This report "Global Savory snacks market to 2010" contains all global regional and country data.

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More Market Research Reports

Featured Book

Snack Food Processing

This book is the definitive book on developing, preparing and processing shelf stable savory snacks. Chapters cover a wide range of topics, including ingredients, raw materials specifications, equipment, materials handling, sensory evaluation and quality control methods, and the preparation and processing of specific snack products.

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More Books

Featured Product

The standard colour card that is used world wide for the evaluation of french fries is the USDA french fry colour card

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News

French Fries and Potato Specialties

Chips and Snacks

Dehydrated Potato Products

Potato Starch

Ingredients for Potato Processing

Processing Equipment

Potato Supply Chain

QSR Restaurants

Health and Nutrition

Energy and Environment

Food Trends

New Companies