C1
SUNDAY, AUGUST 6, 2017
Business
Ray S. Eñano, Editor / Roderick dela Cruz, Issue Editor business@manilastandard.net
SOFT DRINK TAX TO HIT TANG, KOPIKO Kris Library head Arizza Nocum
FILIPINA SHINES IN HONG KONG CONFERENCE
Scan this icon to view the PDF
SWEETENERS.
Mayora (Vouno Trade and Marketing Services Corp.) regulatory manager Joan Mary Sumpio (left) and Mondelez Philippines Inc. head of corporate and government affairs Shanahan Chua
A
GOVERNMENT attempt to discourage soft drink consumption and raise additional revenues by taxing sugary drinks now threatens to unsettle the entire P147-billion non-alcoholic beverage industry, with prices of instant coffee and powdered juice likely to shoot up by over 50 percent and 200 percent, respectively. “This is anti-poor. About 92 percent of Filipino households consume instant three-in-one coffee,” says Joan Mary Sumpio, the regulatory manager of Mayora (Vouno Trade and Marketing Services Corp.) which distributes the Indonesian coffee brand Kopiko in the Philippines. Sumpio says an excise tax of P10 per liter of volume capacity on sugar-sweetened beverages will likely increase the base price of a 25-gram sachet of Kopiko from P5 to P8. The House of Representatives earlier passed House Bill No. 5636, the first package of tax reforms, which includes the imposition of P10 or P20 excise tax per liter of sugar-sweetened beverages such as soft drinks, sweetened tea, sweetened coffee, carbonated beverages with added sugar, flavored water, energy drinks, sports drinks, powdered drinks not classified as milk, juice, tea and coffee, cereal and grain beverages and non-alcoholic beverages that contain added sugar. The Department of Finance hopes to raise an additional P47 billion from taxes on sugarsweetened beverages. The excise tax, however, will not be imposed on milk products, infant formula, milk alternatives (soy milk, almond milk), flavored milk (chocolate milk), 100-percent natural fruit juice, 100-percent vegetable juice, meal replacement, medically indicated beverage, ground coffee and unsweetened tea. Also exempted are drinks made inside coffee shops, juice shops and made by street vendors.
“A lot of products will be slapped with P20 per liter excise tax. So, it’s not just a 100-percent rate maximum increase. It is really over 200 percent just like in the case of Tang. The public needs to be aware that it’s not just the carbonated drink [soft drinks] that will be impacted. There are other beverages like powdered juices and three-in-one coffee which really the target the C, D and E market. The poor will be affected the most,” says Shanahan Chua, head of corporate and government affairs at Mondelez Philippines Inc. which distributes Tang powdered juice in the Philippines. The proposal is to slap a P10 excise tax on beverages using pure Philippine sugar and P20 on products using other sweeteners. “So, if you look at our product like Tang, the price increase would be P20, because we are a fully imported finished good. We are going to be taxed P20, so the base price of a 25-gram sachet of powdered juice that could make a 1-liter drink would increase from P9 or P11 including VAT at sari-sari stores to over P30. “That is about a 200-percent price increase,” Chua says. “For Tang, our consumers are mostly C, D and E market. I don’t think the D and E consumers will be able to afford over P30 Tang. They have been buying it for less than P11 at sari-sari stores,” says Chua. Chua says an excise tax of P20 per liter of volume capacity on SSBs will be the highest in the world, exceeding P15 a liter in Norway and P9 a liter in the US. Mayora and Mondelez are among the 13 member-companies of the Beverage Industry Association of the Philippines, which operates more than 100 manufacturing sites with over 35,000 direct employees and P130 billion in investments in the country. Chua says about 80 percent of the consumers of SSBs are low-income earners. Data show that carbonated beverages alone account for 31 percent of sari-sari store sales. A UA&P economic impact study of the SSB bill says the measure will hurt sugar and coffee farmers, and sari-sari store owners. “Based on UA&P study, we’re looking at around 30-percent impact on revenue. In the end, it’s our consumers who would be impacted,” says Chua. Sumpio, a nutritionist by profession, also
contests the reason for taxing SSBs, saying there is no concrete study linking sweetened drinks to obesity or diabetes in the Philippines. She says Filipinos’ per capita consumption of nonalcoholic ready-to-drink beverages is insignificant compared to other countries. A study shows that the annual beverage per capita consumption in the Philippines was only 160 servings (8 ounces per serving), compared to over 600 servings in Mexico and over 500 servings in the US. Sumpio says that of the 192 countries in the world obesity index of the World Health Organization, the Philippines ranks only at 155th. “Based on national studies, the contribution of sugar to total grams of food intake among Filipinos is low, and it will be lower if you convert it into caloric contribution. It is not enough to be a direct cause of diabetes or obesity,” says Sumpio. Chua says the UA&P impact study based on AC Nielsen data also shows that the proposed tax will result in reduced government revenues, economic contraction and job losses. The study forecasts a P20-billion decline in sales of SSBs, P51-billion drop in revenue of related industries, a loss of 133,750 direct jobs, 1.5-percent increase in unemployment rate, P30-billion loss in revenue from VAT and corporate income tax and a total of P63 billion in economy-wide losses. Chua says the tax computation should be based on the sugar content and not on the whole volume of the product. “Generally, if we look at the volumetric tax rate, it applies differently across our products. It is not targeting the sugar content. It is per liter, and our 25-gram sachet makes one liter. Regardless of how much sugar you have in the product, you are taxed at the end product. So technically, they are also taxing the water,” says Chua. Sumpio agrees, saying “technically, 85 percent of what they are taxing is water.” Chua says sugar accounts for less than 2 grams of a 100-milliliter glass of Tang juice. “That’s around 20 calories per serving,” he says. Both Chua and Sumpio says the excise tax, at its current form, will hurt the sales of Kopiko and Tang. “Coffee is a very price sensitive category. A 50-percent price increase could result in a 40-percent decline in sales,” says Sumpio. “The Philippines is a very price sensitive Turn to C2
MARVIN AGUSTIN BRINGS GEN KOREAN BBQ HOUSE TO MANILA
Actor Marvin Agustin leads the opening of GEN Korean BBQ House at SM by the Bay.
EXCELLO Restaurant Management Group of actor Marvin Agustin has expanded its list of restaurants in the Philippines, with the opening of an ‘all-youcan-eat’ Korean barbecue restaurant at SM by the Bay along Seaside Boulevard within the Mall of Asia Complex in Pasay City. GEN Korean BBQ House, which originated in the sunny California and is famous for top-of-the-line and premium meat and seafood, has made its way across the Pacific and landed on Manila shores, becoming the latest foreign brand brought to the country by Agustin’s Excello group. Agustin’s business partners in Excello are Raymund Magdaluyo and Leina Bolinas. David K im, the founder of GEN Korean BBQ House and senior corporate manager
David Ghim, attended the opening of the first Philippine outlet, which is also the brand’s first location outside the US. “We are very happy for this brand. We are happy for the presence of the owners from the USA. Thank you very much,” says Agustin. The restaurant has a modern ambiance of a blacklit restaurant, replicating the design of US locations. It offers over 20 meat options paired with side dishes including kimchi. “Walking into the Manila branch will feel exactly the same as if you were on the West Coast,” Excello says in a statement. The restaurant is open from 10 a.m. to 12 midnight on weekdays and 10 a.m. to 2 a.m. on weekends. Marielle Franchesca Santiago
A YOUNG Filipina social media marketer and peace advocate represented the Philippines in a prestigious five-day international youth leaders forum in Hong Kong. Arizza Nocum, 22, of KristiyanoIslam Peace or Kris Library, was invited by Hong Kong Federation of Youth Groups to share her knowledge and experiences with local young leaders in the “Leaders to Leaders 2017 Summer” program on Aug. 1 to 5. Nocum, who was asked to discuss the issues of poverty and education to more than 1,000 students and working youths, is one of the five eminent global leaders from different countries picked by HKFYG, the city’s largest youth service organization. The other speakers from Singapore, Hong Kong and Jordan talked about climate change, women empowerment, public speaking and social investments. “I am both proud and humbled to be invited here to discuss the intertwined issue of poverty and education,” Nocum said, citing the impact of poverty to the global problem of lack of access to quality education among the youth. “It would be an honor and a great achievement for us to impart to the young people of Hong Kong our works and experiences in the KRIS Library. Together, we can make this world a better place for everyone,” she said. Born to a Catholic father and a Tausug mother, Nocum is the overall head of Kris Library, a non-profit organization that aims to promote peace through education by building libraries, providing scholarships, and distributing educational materials in areas affected by poverty and conflict. Thus far, Kris has built six libraries, provided more than 400 scholarships and spread more than 50,000 books and computers. A magna cum laude graduate of UP Diliman College of Engineering, Nocum also serves as a junior partner and head of the social media arm of the public relations firm Dean & Kings Communications run by her father, former Philippine Daily Inquirer journalist Armand Dean Nocum. The young Nocum is also active in the international campaign to fight violent extremism; she represented the Philippines in Geneva last year as one of the 10 young leaders selected from different countries to serve as peace ambassadors of the Kofi Annan Foundation. The organization was founded by former United NationsSecretary General Kofi Annan in 2007 to promote better global governance and strengthen the capacities of people and countries to achieve peace. Nocum was selected as one of Ten Outstanding Students of the Philippines in February 2017. She was also named the youth awardee during the 2017 Inspiring Filipina Entrepreneurs Awards organized by “Go Negosyo”, the advocacy of the non-profit organization Philippine Center for Entrepreneurship, in March. Presidential adviser for entrepreneurship and Asean Business Advisory Council chair Joey Concepcion cited Nocum “for championing the advocacy of erasing animosity between the Catholics and Muslims through education,” especially in Mindanao.