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Sugar Tax Threatens Jobs, South Africa Coca-Cola Bottler Says

  • Profit could more than half if proposed charge is implemented
  • Government aims to reduce sugar consumption, tackle obesity

Coca-Cola Beverages Africa, the bottling joint venture between the U.S. soft-drink maker and brewer SABMiller Plc, may close South African plants and see profit more than halve if the government pushes ahead with a proposed sugar tax.

South Africa’s National Treasury last month recommended a levy on sugar-sweetened beverages that would generate almost 11 billion rand ($813 million) in government revenue, based on 2012 consumption data cited in the policy paper. The charge is aimed at reducing consumption of sugar and encouraging producers and suppliers to cut the sugar content of their drinks, according to the government.

The newly created bottler’s volumes in South Africa would probably drop by at least 25 percent if the tax were implemented as proposed, based on calculations using government assumptions, according to Velaphi Ratshefola, the managing director of Coca-Cola Beverages South Africa and chairman of the Beverage Association of South Africa, an industry lobby group. Smaller producers could shutter operations altogether, he said.

“Our profit will more than half,’’ Ratshefola said in an interview at Bloomberg’s Johannesburg office on Friday. If the tax goes ahead, CCBA would struggle to keep to an agreement with the government to keep employee levels...