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Coca Cola 3E Discontent About Excise Duty On Soft Drinks

Last spring, during the general meeting of Coca Cola Hellenic, the “patriarch” of the group Giorgos David had condemned the measures announced then by the government and particularly the taxation of dividend for the subsidiaries of multinational companies. 

A year later, the group’s administration expressed its satisfaction for the favourable amendment of the measures, but said it is extremely dissatisfied with the government’s intention to impose an excise duty on soft drinks. 

Despite the strong pressures for to avoid the duty, it is considered unlikely not to be applied. However, since the signing of the Memorandum of Understanding, it has been known that an excise duty on non-alcoholic beverages (soft drinks, juices, etc.) would be imposed by 2012 at the latest. The new tax measures was finally included in the new package of measures causing strong reactions on the part of the industry, as it expects all VAT to increase. 

Coca Cola Hellenic insists that the imposing of a duty will deliver the opposite results, as the group’s president estimates that it would result in a fall of demand and rise of inflation. Citing an a study of the Foundation for Economic and Industrial Research (IOBE) which states that an increase of 1% in taxes results in a reduction of 1.5% in sales, he warned that the measure would hit the companies and push unemployment higher. 

Meanwhile, the scenarios revived that Coca Cola 3E considers to transfer a large part of its (administrative at first) activities and perhaps its headquarters abroad. Such rumours go around occasionally, with company’s sources repeating that major shareholders have never expressed such an intention.  

These developments are part of a very burdened environment for the market, whose turnover is estimated at €1b, taking into account the sales in supermarkets, kiosks and foodservice. Sales of non-alcoholic beverages decreased by 8% last year, while sales of soft drinks fell by 12%, with Coca Cola 3E reporting decreased total sales of 11% in Greece.
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