Coca-cola hikes by 80% its sugar purchase from PH in 2017

07.12.2017

Coca-Cola FEMSA Philippines (KOF PH) bought two million bags of local sugar as part of its manufacturing operations this year, a more than 80-percent increase from 2016, the company said in a statement on Wednesday.

The company said it purchased 1.1 million bags of local sugar in 2016, with the higher volume of purchases this year reflecting how it is “furthering its partnership with the local sugar sector.”

KOF PH did not say how much it would be buying in 2018, when tax on sugar-sweetened beverages (SSB) is expected to be slapped at the expense of consumers and even beverage makers. Asked for comment, a representative of the company has not clarified on this as of press time.

Nevertheless, after the P850 million expansion of its Bacolod bottling facility, KOF PH said the resulting increase in the plant’s production output “has ensured a corresponding increase of the sugar that the company purchases directly from the local industry.”

“Demonstrating its commitment to contribute to the growth and robustness of homegrown industries, Coca-Cola FEMSA Philippines (KOF) will be buying more locally-sourced sugar to use in its products,” the company said.

How its sales would be affected is yet to be seen, especially given that both chambers of Congress are still ironing out their different SSB tax provisions indicated in the respective versions of the first tax reform package under the Duterte administration.

In late August, Juan Lorenzo Tañada, company director for legal and corporate affairs, said they may have to “revisit” its plan to invest an additional $1 billion in the country up to 2022, since the proposed SSB tax is expected to hurt consumer demand.

House Bill No. 5636 wants to slap P10 per liter for SSBs using local sugar and P20 for those using imported sugar, the latter becoming a cause of concern since it would violate a rule in the World Trade Organization.

In this case, Coca-cola products would be slapped with the P10-per liter tax given that it uses local sugar for its production.

On the other hand, Senate Bill No. 1592 lowers the rate to P4.50 per liter for beverages using caloric and non-caloric sweeteners, and imposed a tax of P9 per liter for beverages using high fructose corn syrup. The bill did not distinguish local sugar from its imported counterpart.


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