The country’s leading beverage maker Zest-O Corp. sold significantly fewer drinks last year as Filipinos had yet to fully adjust to higher prices caused by the Duterte administration’s sugar tax.
Zest-O Corp. founder Alfredo Yao said in a chance interview on Wednesday that the company’s sales volume dropped by about 30 percent last year, as the company had to raise prices and reduce the size of its drinks to cope with the tax imposition.
Yao told reporters on the sideline of this year’s Philippine Business Conference and Expo that the mass market would, at best, take another year to adjust to the higher prices.
In the meantime, the company—which made the popular Zest-O juice drink—had been selling its products in Indonesia and Vietnam, which helped the company diversify its market.
“We are OK. We operate outside now. We are in Indonesia. We are in Vietnam,” he told reporters.
He later clarified in a phone interview that the company had manufacturing plants in the two Southeast Asian countries.
The year 2018 marked the company’s first year under the Tax Reform for Acceleration and Inclusion (Train) Act, the first tax reform package passed under the Duterte administration which lowered the personal income tax but raised consumption taxes.
Train has hit the beverage industry hard. Its sales volume dropped after the law taxed sugary drinks either P6 or P12 per liter.
Zest-O is catering to the masses, a market whose spending habits could change because of higher prices. Yao said the market was still in an “adjustment period,” which he said might take another year.
Yao, who is also the chair of listed firm Macay Holdings Inc., noted how they were preparing to announce an overseas acquisition of a beverage firm.
He deferred from further expounding on the deal, however.