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Coca-Cola Beverages Africa warns of job cuts if proposed sugar tax goes ahead

DBR Staff Writer Published 22 August 2016

Coca-Cola Beverages Africa (CCBA) could close its South African plants if the government there goes ahead with a proposed sugar tax intended to tackle the obesity problems of its citizens.

Bloomberg reported that following the plants' closure, CCBA could see profit more than halve.

The bottler is a joint venture between the US-based Coca-Cola and SABMiller.

South Africa Finance Minister Pravin Gordhan during a budget speech in February proposed a sugar tax that will be levied with effect from 1 April 2017.

Taxes collected from beverage companies could generate almost 11bn rand (approximately $813m) for the government.

The South African government is expecting that the tax will encourage the beverage companies to cut down on the sugar content of their drinks.

Coca-Cola Beverages South Africa chairman Velaphi Ratshefola as reported by the publication claims that the sugar tax implementation would lead to 25% drop in newly created bottler’s volumes in the country.

Ratshefola also went to the extent saying that smaller producers could end their operations altogether.

According to the South African beverage industry, the 20% surcharge on sugar-sweetened beverages if implemented can result in the loss of 60,000 jobs nationally.

According to City Press, Coca-Cola Beverages Africa chairperson Phil Gutsche compared the sugar tax proposal as the second most serious threat to the beverage industry since 1953.

Gutsche was quoted by the publication saying: “This is an industry matter and it impacts on every member. Nationally, we support more than 200 000 jobs. If this tax proceeds, we stand to lose 60 000 jobs.

“More than 5,000 livelihoods will be affected in Nelson Mandela Bay alone.”

Once the proposed sugar tax is implemented, it will be the first of its kind introduced by South Africa on sugar-sweetened beverages.

The UK, Australia and Thailand are also contemplating on the same process while countries like the Denmark, France, Mexico, Norway, Finland and Ireland already have a sugary tax in place.

Image: Coca-Cola Beverages Africa to be hit hard if South Africa goes ahead with its sugar tax. Photo Courtesy of THE COCA-COLA COMPANY.