PepsiCo and Coca-Cola are the two main aerated drink makers in India with over $3 billion in total annual sales. As per the new goods and services tax (GST) proposed, fizzy drinks are being grouped with tobacco and tobacco products and attracts a 40 percent “sin tax” as compared to 18 percent charged now.
Venkatesh Kini, president, Coca-Cola India and South West Asia ,told Hindustan Times:
Any step in this direction will lead to several challenges for our business and do a lot of damage to us. Our 3 million retailers, thousands of distributors and bottlers… Because this is GST, it will have a ripple effect and hurt the entire ecosystem. In these circumstances, we will have no option but to consider shutting down certain factories.
Coca-Cola India currently operates 57 factories and bottling plants across India and employs more than 25,000 people. India’s per capita carbonated beverage consumption was around 4 litres in 2013, one of the lowest in the world and more than 20 times less than the average American.
Over the years, several countries have proposed “sugar taxes” to discourage consumption of aerated soft drinks in order to tackle obesity and encourage healthier lifestyles. There have been demands from various groups for addition of health warnings to sugary drinks in an attempt to make them as socially unacceptable as cigarettes.
Mexico, which has one of the highest per capita consumption rates of sugary drinks, introduced a soda tax in January 2014 leading to a dip of 6 percent in the purchase of taxed sweetened beverages in 2014.
