Tax on sugary drinks is 'discriminatory', says PepsiCo CEO

Nooyi says the company is however creating products with less or no sugar

Imposing tax on sugary drinks is not the best method of taxation, according to PepsiCo CEO Indra Nooyi.

Imposing tax on sugary drinks is not the best method of taxation, according to PepsiCo CEO Indra Nooyi.

Imposing tax on sugary drinks is not the best method of taxation, according to PepsiCo CEO Indra Nooyi.

The UAE is likely to introduce excise tax from this year with rates ranging from 50 percent and 100 percent on certain goods including import, production and sale of tobacco products, carbonated drinks and energy drinks.

In its Fiscal Balance Program 2020 report published in December, the Saudi government said it would also impose a 50 percent tax on soft drinks and a 100 percent tax on tobacco and energy drinks from Q2 2017.

Last year, the World Health Organisation also urged countries to introduce sugary tax to curb soaring obesity rates, particularly in children.

In a recent interview with Arabian Business, Indra Nooyi said she was against any discriminatory tax, but in favour of working with governments to address any health issues.

“I think the sedentary lifestyle of people did cause an increase in weight and the wrong kind of weight; obesity levels went up. I think governments that want to think about a sugar tax have to think about … what are you trying to solve? Are you trying to raise revenues or are you trying to solve a health issue?

“If you’re trying to address a health issue, let’s approach this in a more holistic way. We want consumers to shift to lower-sugar offerings, because water is great but people want a little bit of flavour and taste. The best thing for us to do is let us incentivise consumers to move to lower sugar offerings, so if you drink a ...sparkling beverage with 10, 20 calories, or 50 calories, don’t tax it,” Nooyi said.

She said the company is already creating products with less or no sugar in response to consumer demand.

Soft drink – the core of PepsiCo for a century – now accounts for less than 25 percent of the company’s total revenues. Soft drinks sold today contains significantly less sugar, whether it is the standard Pepsi, with 30 percent less, or diet Pepsi with none.

In October, PepsiCo announced that by 2025 two-thirds of its drinks would have 100 calories or fewer from added sugar, per 350 millilitres.

About 25 percent of the company’s global revenue already comes from products it categorises as “everyday nutrition”, including Quaker oat products, Aquafina and healthier varieties of snacks, such as Forno (baked Lay’s potato chips) and SunBites.

“Clearly society changes and people’s tastes change; companies have to change too. One of the things we do as a consumer products company, we watch consumer trends, we study consumers constantly and we change our direction and our product offering with those consumer trends,” Nooyi said.

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Posted by: Nick James

Oh poor PepsiCo. Tough - excellent idea to tax sugary drinks.

However, drinks containing High Fructose Corn Syrup should be taxed even higher.

Posted by: MT3

Nick - couldn't agree more - a policy designed as financial assistance to the grain belt in the US has led to hugely unhealthy processed foods proliferating on our supermarket shelves. Many people suffer from illnesses related to consuming too much corn syrup that can cripple you (I have been one) and few doctors seem willing to explicitly make the link. The food industry has huge financial firepower behind it for marketing, advertising, lobbying, research etc.. so the UAE government is right that the way to balance this out is to hit the companies and consumer in the pocket; education simply doesn't work quickly enough. The food industry is behaving the way the tobacco industry did in the 50s and 60s in the West and it needs strong government action to stop them.

Posted by: Mosa

I am aware what carbonated drinks contain, but they are definitely not as bad as cigarettes, alcohol and tobacco.
Some people like me do not consume alcohol or smoke or chew tobacco - but love carbonated drinks, and I am not obese.
Its all about balancing it with a healthy lifestyle and keeping healthy eating habits - with a bit of carbonated drinks. Having carbonated drinks is not the only reason for people becoming obese.

Posted by: Vivek

I don't think it's the carbonated drinks that are the problem. It's the sugar content in the drink that's an issue

Posted by: Take away

Where do you stop, you have a choice, you do not have to buy these drinks . how about salt and sugar in tin foods and fast foods, is that being taxed , why just fizzy drinks. the fizzy soft drinks do have a large amount of sugar but one should just be careful and eat and drink sensibly.

Posted by: Nick James

Yes, we should have a choice, but most food outlets in the UAE and other GCC countries do not give you a wide enough choice. they mainly limit the choice to Coke or Pepsi products, and normally have to sign a contract limiting them to what alternatives they can offer.

Go to a good restaurant in Saudi and see what a good selection of non-alcoholic drinks they offer.

Posted by: Tom

The issue with carbonated soft drinks is not just the sugar, which in itself is a huge health concern. Even the low sugar products are full of nutritional garbage. Particularly the alternative sweeteners used.

Posted by: Alan Thompson

I believe that a Can of Pepsi has around 15 (FIFTEEN) spoonfuls of sugar in it. That is a staggering amount of sugar and no wonder the World is becoming obese. Perhaps a large TAX might contribute to the Health Costs of dealing with obesity !!. Pepsi are only interested in money clearly.

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