Sales of sugary drinks hard hit by new taxes, says Nielsen

While sales of sugar-sweetened beverages have been weakening over the past few years, the accelerated rate of decline in sales in February — a month after the implementation of excise tax hikes — has begun to reflect consumers’ “typical” reaction to price increases.

Thus said market research firm Nielsen whose recent retail index study showed more pronounced sales declines in sari-sari stores, with all five sugar-taxed beverage categories showing faster sales decline of an average of 8.7 percent in February 2018 versus 4.4 percent in the same period last year.

As of February this year, prices across five categories carried by sari-sari stores increased by 20.6 percent compared to a year ago. Carbonated soft drinks and energy drinks had the biggest price jumps among sari-sari stores at 21 percent and 18 percent, respectively. Other sugar-sweetened beverages such as ready-to-drink juice, powdered juice, and powdered tea have not yet fully passed on the tax to consumers as prices have increased less than 10 percent.

Powdered juice and powdered tea have showed double-digit declines at 15.4 percent (versus 1.7 percent in February 2017) and 18.1 percent (versus 3.4 percent in same period last year), respectively.

Carbonated soft drinks sales decline also accelerated from 4.1 percent last year to 7 percent in February of this year.

The Nielsen retail index provides continuous tracking of product sales in defined retail outlets, and is the industry currency in measuring a brand’s market share.

“While healthier and more convenient options contributed to the slowdown of sugar-sweetened beverage over the past year, we can attribute the faster rate of decline to how consumers have changed their consumption and shopping habits amid the first wave of price increases,” Nielsen Philippines managing director John Patrick Cua said in a statement.

“This reaction from consumers is a normal and expected behavior immediately following a price increase,” he also said. “Over time, some consumers may go back to old buying habits while some will adopt their new buying patterns.”

“Consumers will not totally give up these sugary drinks because these are simple joys that they provide to their kids and themselves,” Cua, however, added. “For instance, some say ready-to-drink juice cannot be compromised as it is their child’s baon.”

In contrast, decline in sales in supermarkets are less substantial, slowing down by 9.4 percent in February versus 14.7 percent in February 2017. In examining the seven categories, energy drinks and ready-to-drink juice show significant declines with 10.7 percent (versus 3 percent in February 2017) and 8.8 percent (versus 4.7 percent in February 2017).

In supermarkets, prices across the seven sugar-taxed categories increased by 16.6 percent in average. Prices of ready-to-drink tea and carbonated soft drinks indicated the highest price hike in supermarkets, with increases of 24 percent and 21.6 percent compared to year ago prices. /kga