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Coca-Cola explains the sour side of a sugary tax on SSBs

Dec 07 2016 20:18
Adiel Ismail

Cape Town - A tax on sugar-laden beverages may jeopardise Coca-Cola's investment plans in South Africa. However, there is an alternative to the sugary tax, said head of communications Zipporah Maubane.  

Finance Minister Pravin Gordhan announced the proposed new tax in his budget speech in February this year after the Department of Health released a document on measures to help prevent and control obesity in SA.

Treasury has since been engaging with various stakeholders to inform them of its decision about the possible implementation of the tax. Fin24 reported on Wednesday that the policy paper presented to Treasury by think tank the South African Institute for Race Relations was funded by Coca-Cola.

READ:

Coca-Cola bankrolls IRR research on sugary tax in SA

IRR responds to Fin24 story on its sugar tax report

Coca-Cola concedes that South Africa faces an obesity challenge, said Maubane. However, she maintains that obesity is a complex problem that requires collective efforts from the state, the public and the private sector.

"It is clear that there is no one ‘silver bullet’ to solving the obesity problem; it is a complex problem that requires collaboration across many different government departments and between the public and private sector," Maubane said.

"A bold plan that achieves real results requires proper research and impact assessments to ensure that the right tools are selected to address obesity, without causing job losses and economic harm," she said.

"Coca-Cola, along with other players in the beverage industry, is committed to working with the government to find effective solutions that address the obesity challenge in South Africa, taking health and economic needs fully into account."

It is short-sighted to implement a tax as a first step simply because it is easy to do, Maubane added.

"Taxes are not most effective way to reduce peoples’ energy intake. In fact, taxes have little if any positive impact on health as measured by improving Body Mass Index."

READ: Sugar tax alone can't solve health problems - expert

Without a comprehensive total dietary study to determine exactly what South Africans are eating and drinking, Maubane said it makes little sense to target only one food group.  

"Especially as consumption of products such as cereals and fats, which also contribute to obesity, has increased over the past few decades, yet these products have not been targeted with a tax."

Maubane emphasised that Coca-Cola's concern is that proper consideration has not been given to other viable alternatives to the tax in South Africa, such as education campaigns, and Coca-Cola's commitment to reduce calories by double the amount the tax aims to achieve and to subject that reduction to independent verification.

"We fully accept there is a problem of obesity in SA; however, as SSBs make up a very small proportion of added sugars in the diet, and we are offering alternatives that do more than a tax would to reduce obesity while avoiding negative economic effects, our request is simply that these options be tested before proceeding to increase the tax burden on South Africans."

READ: Coca-Cola's global sugar tax warfare

She explained the alternatives the beverage industry is willing to commit to.

"[It will] double the kilojoule impact of the proposed SSB tax through reducing pack sizes to control portion sizes, reformulating products to reduce the sugar content and increasing the share of light and diet variants," Maubane said.  

"Those three interventions alone could contribute double the kilojoule reduction than a tax, without the negative impact of job losses and a slowing of growth in the wider economy."

Maubane also highlighted some of the initiatives Coca-Cola has worked on to impact public health in South Africa.

"We help get people moving by supporting physical activity programmes in every country where we do business."

READ: How sugar tax will create future taxpayers

She said over the last 10 years, Coca-Cola has continued to support physical activity programmes, especially those focusing on improving the health of young people and creating awareness of the importance of active, healthy living.

"More than 300 000 youths have participated in sporting activities such as the Copa Coca-Cola (where Lucas Radebe began playing), as well as cricket and rugby. We hydrate races such as the Comrades Marathon and Two Oceans Marathons."

Maubane added that together with bottling partners Coca-Cola Beverages South Africa and Coca-Cola Peninsula Beverages, they support non-mainstream, family-orientated, active, healthy living programmes.

"We support the Big Walk, which we host in partnership with the Department of Sport and Recreation. The Big Walk promotes walking as a fun physical activity among the youth, women and families. The event attracted over 16 000 participants in Pretoria last year and was led by Sport and Recreation Minister (Fikile) Mbalula again this year on October 2."

Fin24 asked Maubane about the anticipated impact of the proposed tax on the company's bottom line in South Africa.

"Without giving company-specific figures, it’s fair to say that we anticipate the associated volume decline in our portfolio of SSBs will lead to thousands of direct, upstream and induced job losses across our supply chain. It may also jeopardise our investment plans in the country."

Read Fin24's top stories trending on Twitter:

coca-cola  |  sugary tax  |  tax  |  sa economy  |  soda
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