Mondelez opposes higher excise tax on sweetened beverage

MANILA, Philippines - Snack food manufacturer Mondelez Philippines Inc. has expressed serious concerns over a proposal to slap higher excise tax on sugar sweetened beverages, saying such a move would significantly affect sales of Tang, the country’s market leader in powdered beverage.

In a briefing yesterday, Mondelez Philippines country head Ashish Pisharodi said the  retail price of Tang may surge to as high as P30 per sachet from the current P9 should the higher excise tax be implemented.

“If Tang costs P30, then nobody might drink it anymore, then you (government) get nothing. So you want to make Tang grow and still get revenue like any other government does,” Pisharodi said.

Pisharodi said Tang accounts for about half of the country’s powdered beverage industry’s sales.

“We feel the tax is premature in the sense that not enough discussion and dialogue has happened to be able to implement the tax with the timeline that is currently proposed. Number two, we feel the tax is regressive,” he said.

“We are not against taxation. We are against the current way the bill is drafted. There are ways to achieve objectives and still pay tax, contribute to the goals of the government, and that is what we are discussing right now,” Pisharodi added.

The tax reform measure recently passed by the House of Representatives includes a provision imposing a P10 excise tax on every liter of sugar-sweetened beverages containing locally produced sugar, while others will be taxed P20 per liter.

“We as Mondelez and as an industry do have serious concerns about the bill that the Senate is reviewing right now. We have real concerns as to how that is structured and on its taxation rate proposal which is per volume liter,” Mondelez Philippines head of corporate government affairs Shanahan Chua said.

 “As a member of Beverage Industry Association of the Philippines, what we want is to urge the government to take a step back and continue the dialogue with us to look at this and to take more time to have a fairer taxation system,” Chua added.

Mondelez is also the country’s market leader in cheese through Eden and Cheez Whiz.

The firm’s cheese products are manufactured at its plant in Paranaque City, while the other products are imported.   

With its dominance in the powdered beverage and cheese categories, Pisharodi said Mondelez intends to be the “cookie of choice” among Filipinos through Oreo.

He said the biscuits category is where the company is seeing a strong double digit growth moving forward.

Supporting this growth are new product launches such as the introduction of Oreo Thins which the company unveiled yesterday.

“We are bringing a well-loved classic to a whole new level of snacking experience. We want to be a snacking powerhouse in the Philippines just like where we are in other parts of the world,” Pisharodi said.