Coca-Cola Femsa expansion hangs due to tax plan

With the proposed tax on sugar-sweetened beverages (SSB) expected to hurt consumer demand, Coca-Cola Femsa Philippines Inc. may have to “revisit” its plan to invest an additional $1 billion in the country up to 2022, a top official said.

Juan Lorenzo Tañada, company director for legal and corporate affairs, told reporters yesterday that a decrease in consumption rates would push the company to reevaluate its investment in the country, warning that this was what any other business would do.

Coca-Cola Femsa joins other members of the beverage industry that have voiced their opposition to the planned excise tax on SSBs, a move which many claimed would not only fail to reach its objectives of curbing health-related concerns, but even hurt the larger consumer public.

The first package of the comprehensive tax reform program being pushed in Congress suggests a levy based on drink volume: P10 a liter for SSBs using local sugar and P20 for those using imported sugar. In the case of Coca-Cola Femsa, its products would be slapped a P10-a-liter tax given that it uses local sugar for its products.

“What we do know for certain is that the tax that was originally proposed, we feel, will not be viable at all. It will have an impact on our business in its present form. If there is an impact, we would have to, as I said, revisit [our plan],” he said.

Setting the issue on SSB aside, Tañada said that the country remained to be a “viable” destination for its investments given the economic growth that the country has been enjoying in the past years.

However, he said that the company needed to “evaluate all sources of risk,” including the SSB tax that could hurt the purchasing power of the company’s main consumers.

“Our market really is the C, D and E socioeconomic classes. In the form that was originally proposed at P10 per liter, it would be antipoor,” he said.

Coca-Cola Femsa was formed in 2013 after Femsa acquired 51 percent of Coca-Cola Bottlers Philippines Inc. (CCBPI) from The Coca-Cola Co.

Reaffirming its commitment in the country, the company, which is the world’s largest bottler of Coca-Cola products, announced a five-year plan that would involve an annual investment of $180 million up to 2022. According to Tañada, the plan involved training, expansion of the land, hiring more employees and purchasing capital equipment, among others.