Coca-Cola Beverages Africa, a bottling joint venture between the U.S. soft drink giant and brewer SABMiller Plc, will reconsider its spending and other commitments made to the South African government if the country presses ahead with a planned sugar tax.
South Africa’s National Treasury last month recommended a tax on sugar-sweetened beverages of 2.29 cents per gram of sugar, after Finance Minister Pravin Gordhan proposed a levy to be implemented in April 2017. Pure fruit juice, unsweetened milk and milk products will be exempt, the Treasury said.
While neither Coca-Cola nor the bottling group are opposed to taxes, they believe that the charge being mooted by the government is discriminatory and will have a “huge economic impact,” Vukani Magubane, public affairs director for Coca Cola Southern and East Africa, said on Thursday. The plan could cost the industry 60,000 jobs, CCBA chairman Phil Gutsche said in a statement on Tuesday.
“Commitments around jobs and the like will have to be relooked at in the context of a tax that will have a huge catastrophic effect,” Magubane said. The companies’ stance was first reported in Johannesburg-based Business Day newspaper.
SABMiller and Coca-Cola Co. received South African antitrust approval in May to combine their African bottling operations after the companies reached agreement with the government to protect jobs and set up two 400 million-rand ($30 million) development funds to smooth the deal’s path. CCBA will produce and distribute about 40 percent of all Coca-Cola beverage volumes in Africa and is the company’s 10th largest bottler globally, it said in a statement July 4.
SABMiller holds 57 percent of CCBA, with Coca-Cola holding 11.3 percent and the rest owned by the Gutsche family, which was the majority owner of Coca-Cola’s bottling partner in South Africa.