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