Subscribe to industry newsletters

Search jobs

Coke joins fray to oppose sugar tax

The sugar tax battle is hotting up with soft drinks heavyweight, Coca-Cola, saying the levy on sugar-sweetened beverages (SSBs) will threaten thousands of jobs.
Speaking at a press conference, Coca-Cola Beverages Africa chairperson, Phil Gutsche called on the Nelson Mandela Bay municipality and the Eastern Cape government to assist the beverage industry in opposing the tax.

Coke joins fray to oppose sugar tax
© Oleg Doroshin

“Our industry supports the livelihoods of 14,000 people in this city and many more in the province. Nationally we support more than 200,000 jobs. If this tax proceeds, we stand to lose 60,000 jobs in our industry. More than 5,000 livelihoods will be affected in Nelson Mandela Bay alone,” he said.

The South African treasury, on July 8, published a policy paper on a proposed 20% tax on SSBs to take effect April 2017. The motivation behind the tax is an attempt to reduce obesity and lifestyle diseases, and thereby the associated rising healthcare costs involved in treating these preventable conditions.

The poor will become poorer, not thinner

The poor will also carry a disproportionate burden, but will receive little benefit. For example, Mexico’s tax on SSBs resulted in a reduction of only 17kj of a daily intake of more than 12,000kj. “The poor will therefore literally become poorer and not thinner as a result of this proposed tax," Gutsche said.

He was supported in this view by BevSA executive director, Mapule Ncanywa, who emphasised that 97% of South Africa’s obesity problems had nothing to do with sugar-sweetened beverages, as they accounted for only 3% of daily kilojoule intake.

Pro-tax lobby disagrees

However in another report, Wits professor, Karen Hoffman said the tax could result in a decrease of more than 220,000 in the number of obese adults.

Hoffman also contested an earlier statement made by Ncanywa, in which she said that although sales hadn’t been affected when Mexico introduced the tax, an estimated 40.000 jobs would be lost.

"How did the Mexico sugar tax lead to job losses if sales were not significantly affected?" Hoffman asked.

Better ways to support goals

According to the beverage industry, its contribution to the economy has increased much faster in real terms since 2008 (258% increase), than overall GDP (which grew by only 43% over the same period).

“There are better ways to achieve the government’s goals,” Ncanywa said.

The beverage industry said it is strongly committed to South Africa’s economy, with plans to invest in opening 30,000 new outlets (creating 60,000 new jobs) over the next five years. If the industry continues to grow, its contribution to tax receipts will quickly outpace expected revenues from the SSB tax.

It also maintained that voluntary reformulation, packaging, labelling and other targeted commitments, already adopted in South Africa, will result in greater impact on tackling obesity than the anticipated reduction of only 37 kilojoules a day because of a tax.

Randall Dayce, plant manager at Coca-Cola Beverages South Africa in Nelson Mandela Bay indicated that already taxes on average accounted for 25% of the purchase price of soft drinks.

He and smaller bottlers, Twizza and Little Green Beverages, also reported that the tax would have significant implications for employment and growth prospects in the communities where they operated and in the province.

Let's do Biz