Sweetened beverage tax under Train reduces sales of Tang powdered juice

Sales of Tang powdered juice dropped this year following the implementation of the Tax Reform for Acceleration and Inclusion law, which imposed an excise tax on sugar-sweetened beverages, manufacturer, and distributor Mondelez Philippines Inc. said.

Mondelez Philippines head of corporate and government affairs Shanahan Chua said the Train law or  Republic Act No. 10963 affected the sales not only of Tang but also of the whole powdered juice industry.

“We’ve anticipated that. All that’s happening now was calculated already.  We’ve adjusted accordingly, as any business affected by Train,” he said.

Section 47 of RA 10963 levied a tax of P6 per liter on sweetened beverages using caloric or non-caloric sweeteners and a tax of P12 per liter on those using high fructose corn syrup.  The law exempted 3-in-1 instant coffee and milk.

Chua said while sales of Tang declined by a single-digit level, the company was hoping that consumption would catch up soon with higher prices as “consumers adjusted to the new norm.”  

He said powdered juices like Tang were more affected by the Train law compared to ready-to-drink beverages such as soft drinks.

“It doesn’t matter how much sugar or how less of a sugar there is in a product. What matters is the output, the final serving size. The law has really impacted our sales,” he said.

Chua said Mondelez was now creating a marketing campaign that would be more responsive to consumers and that would add more value to the product.

Mondelez launched its Tang mobile campaign and added another variant or flavor to engage consumers to buy more of the product. Tang has 14 flavors including mixed berries, the latest addition to the beverage portfolio.

Tang is one of the company’s main revenue drivers in addition to Eden Cheese, said Chua.

Results of the University of Asia and the Pacific Economic Impact Study (2016) and AC Nielsen Data showed that ‘sweet tax’ would affect the income of sari-sari stores, which represented 91 percent of retail stores in the country.  About 31 percent of sari-sari store sales were carbonated and powdered beverages.

The studies projected a possible decline of about P20 billion in sales of sugar-sweetened beverages and a P51-billion drop in the revenue of related industries that could affect 39,000 direct and indirect jobs.

Topics: Tang powdered juice , Tax Reform for Acceleration and Inclusion law , Mondelez Philippines Inc.
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