Tuesday, September 29, 2020

Oishi unruffled by rise in sugary taxes

Sep 10. 2019
Nongnuch Buranasetkul
Nongnuch Buranasetkul
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The doubling of taxes on beverages containing sugar in October will not have a significant impact on Oishi Group, the top producer of bottled green tea and beverage products, says Nongnuch Buranasetkul, the company's president and CEO.

The Excise Department announced on Monday (September 9) that taxes on sugary drinks will double from October 1, with beverages containing 10 to 14 grams of sugar being taxed at Bt1 per 100 millilitres instead of Bt0.5 per 100ml, adding that this tax will not be passed on to consumers despite the higher cost of production. Taxes on sugary drinks will also be doubled every two years. For instance, from October 1, 2021, beverages containing 10g to 14g of sugar will be taxed Bt3 per 100ml before rising to Bt5 in 2023. This progressive increase in tax rate is expected to force manufacturers to cut down on the amount of sugar in their beverages.

Manufacturers and consumers today, Nongnuch said, are well aware of the health issues related to sugar after the government imposed taxes on sugary beverages in 2017. It is good that the behaviour of entrepreneurs and consumers have clearly changed, she added.

“I don’t see the tax hike in October having a similar impact on producers as the first collection in 2017. At that time, the market was severely impacted, mainly due to the increase of excise tax with sugar tax being part of it,” she said.

“The rises due are relatively low and will not affect our product prices,” said Nongnuch.

“More importantly, the government had announced that the tax rate would increase every two years, giving producers of sugary beverages enough time for adjustment,” she added.

Nongnuch said growth of the ready-to-drink green tea market was expected to be flat this year.

“Innovation will be one of our strategies to draw new customers. We will also focus on export, which still have growth potential,” she said.

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