Sales of newly taxed sugary drinks dip further
Performance management company Nielsen said that sales of newly taxed sugary drinks in the Philippines have dropped further as consumers alter their spending habit.
Nielsen said that while sales of sugar-sweetened beverages have really been weakening in the past years, there has been an accelerated rate of decline in sales in February or a month after the implementation of excise taxes.
This, according to the company, reflects consumers’ typical reaction after a price increase.
Nielsen Retail Index data shows more pronounced sales declines in sari-sari stores, with all sugar-taxed beverage categories showing faster sales decline of an average of 8.7 percent in February 2018 versus the decline of 4.4 percent in the same period last year.
Powdered juice and powdered tea, in particular, are showing double digit declines at 15.4 percent (vs. 1.7 percent in February 2017) and 18.1 percent (vs. 3.4 percent same period last year), respectively.
Carbonated soft drinks’ sales decline also accelerated from 4.1 percent last year to 7.0 percent in February 2018.
“While healthier and more convenient options contributed to the slowdown of sugar-sweetened beverage over the past year, we can attribute the faster rate of decline to how consumers have changed their consumption and shopping habits amid the first wave of price increases,” said John Patrick Cua, managing director of Nielsen in the Philippines.
“This reaction from consumers is a normal and expected behavior immediately following a price increase. Over time, some consumers may go back to old buying habits while some will adopt their new buying patterns,” he added.
Once without tax, sugar-sweetened beverages were hit by a tax rate of P6 to P12 per liter due to the implementation of Tax Reform for Acceleration and Inclusion (TRAIN) law.