just On Call - Mexico's sugar tax will cost Coca-Cola FEMSA jobs - CFO
Coca-Cola FEMSA branded the tax "heavy"
Coca-Cola FEMSA's CFO has said a proposed tax on sugary beverages in its domestic market of Mexico will reduce volumes and lead to job losses at the bottler's plants.
In a conference call with analysts yesterday (24 October), Hector Trevino said that if the Mexican senate passes the MXN1 (US$0.08) per litre tax at the end of the month, Coca-Cola FEMSA will raise prices by 12-15%. Despite taking measures to curb losses, the company would still expect volumes to fall by about 5% next year.
That will lead to job cuts as production lines stand idle and demand for delivery trucks fall, Trevino added, without saying how many jobs are expected to go.
“We will pass the tax on to consumer,” Trevino said, “and we expect the industry will do the same thing.”
Trevino also said that Coca-Cola FEMSA will have to look for new “magic price points” as prices go up. “We will have to find prices that are convenient for the consumer,” he said.
The proposed tax, which Trevino described as “heavy”, passed Mexico's lower house earlier this month. The Mexican senate is due to vote on it on Thursday (31 October), Trevino said.
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