PA Food Merchants: More job cuts coming because of soda tax
- Officials from the Pennsylvania Food Merchants Association said the industry should expect more companies to follow PepsiCo's lead and lay off employees as a result of Philadelphia's recent sweetened beverage tax, according to The Shelby Report.
- The PFMA estimates beverage sales dropped 27% since the tax was launched on Jan. 1, and several organizations in the city are trying to repeal the tax via the group “Ax the Bev Tax."
- “The mayor’s regressive tax is gouging families and small businesses across Philadelphia. Working families and seniors living on fixed incomes aren’t just being ‘cranky’ — they are rightfully angry because the mayor’s new 1.5 cents-per-ounce levy has dramatically increased prices on thousands of common beverages across Philadelphia," PFMA President and CEO David McCorkle said.
Alex Baloga, the Pennsylvania Food Merchants Association’s VP of external relations, warned that the city’s soda tax can have a deep, lasting effect on several companies in the area.
Already, Philadelphia soft drink distributor Canada Dry Delaware Valley announced it was laying off a fifth of its workforce due to sales decreasing 45% in the first five weeks of 2017. Last week, PepsiCo Inc. also said it would would be laying off 80 to 100 workers because of the tax, which slashed local company sales by 40%.
As of yet, retailers haven’t released any figures that show a drastic drop in sales. Because shoppers can drive to a supermarket outside of Philadelphia's borders to buy soda without a tax, those numbers are probably coming soon. A Cornell University economist researched the impact of the Berkeley, CA soda tax, and found that many stores absorbed at least some of the cost — especially those close to the city borders.
Similar taxes are likely to crop up in other locations as consumers shift away from beverages with added sugars and artifical sweeteners. It would be wise for groceries to strategize alternative methods for luring shoppers to their store locations, in case similar legislation passes in their city.
It will be interesting to see if the Trump administration responds to this situation, especially since he has said soda is his favorite drink, and one of the focuses of his campaign was increasing American job growth.
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