No immediate price hike for sugar-sweetened drinks

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The Department of Trade and Industry (DTI) is expected to order retailers today not to raise the prices of sugar-sweetened beverages until January 15 as old stocks should not be affected by the implementation of the Tax Reform for Acceleration and Inclusion Act (Train).

Trade Secretary Ramon Lopez told reporters that softdrink companies are confirming with his department the volume of stocks left with distributors and retailers.

He said that, based on experience, companies have deliveries twice a month and, thus, “the usual stock level is two weeks.”

“Manufacturers and retailers should not increase prices. We watch out for hoarders and profiteers. We monitor price changes closely, and also ensure that prices follow the suggested retail price,” Lopez said.


There will be penalties if this is not followed, he warned.

Train aims to lower the personal income taxes and raise excise taxes on fuel, cars and sugar-sweetened beverages.

Under this law, drinks with caloric and non-caloric sweeteners and with high fructose corn syrup will be taxed P6 and P12 per liter, respectively.

Excise taxes on regular and unleaded premium gasoline will also increase from the current P4.35 to P7 this year, P9 next year and P10 in 2020.

Lopez clarified, however, that Train has “no impact yet on gas stations,” which he said still carry old fuel stocks on which the higher excise tax was not imposed. Stocks typically last two to three weeks.

“The excise tax [on fuel]will be applied on the importation/refinery side,” he added.

“The increase [took effect on]Monday was due to the usual ups and downs of world oil prices, which petroleum companies announce from time to time. That’s why the increase was less than 20 centavos, rather than the additional P2.50 excise tax,” Lopez explained.

According to the DTI chief, Train would have “minimal impact” on inflation.

“This is validated by the fact that the increase brought about by the excise tax is about 7 percent to 8 percent, and the fuel and transport cost as percentage of production cost is less than 5 percent,” Lopez explained.

The impact “should not alter SRPs and absorbed by companies. They also do not tend to individually increase prices for fear of losing market share,” he said.

“Changes in [the]price of basic raw materials, if and when it happens, would have a bigger impact on product pricing,” he added, citing pork for canned meat and flour for bread as examples.

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