Soft Drinks

Pepsi pushing back against Philadelphia soda tax with smaller bottles

Tax would add extra 1.5 cents per ounce to the cost of sugary drinks

 

Pepsi is hoping a new idea can revive revenue in Philadelphia.

The soda company is reportedly planning to pull its 2-liter bottles and 12-packs off store shelves in the City of Brotherly Love following the city’s decision to institute a 1.5-cent-per-ounce tax on sugary drinks. But in their place, Pepsi plans to introduce 1-liter bottles, halving the taxes that a distributor — and subsequently, the consumer — would need to pay per bottle.

Customers who purchase a 1-liter bottle would be saving roughly 51 cents in taxes over those who purchase 2-liter bottles.

According to Jennifer Ryan, a Pepsi spokeswoman who spoke with Philly.com, the company is eager to introduce "products and package sizes working families are more able to afford."

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"We believe this will give our retail and foodservice partners the best chance to succeed in this challenging environment and will minimize the chance of product going out-of-date," she added.

Philadelphia’s controversial soda tax has hurt Pepsi’s sales of larger-volume beverages by “more than 50 percent” within city limits, or as much as 40 percent overall (within Philly) when accounting for the sales of smaller bottles, reports Philly.com.

Coca-Cola, too, is promoting their 7.5-ounce mini-cans and 1.25-liter bottles in stores, but they claim it’s not merely because the smaller sizes would reduce the tax burden on consumers.

“We’ve been offering smaller packages across the country – and here in Philadelphia – not because of cities passing beverage taxes, but because they're what people want,” Fran McGorry, the president of Coca-Cola Refreshments' Tri-State Metro Operating Unit, said in a statement.

Coca-Cola says that this strategy has actually proved effective well before Philadelphia’s soda tax took effect in Jan. 2017: Sales of the smaller beverages spiked by more than 9 percent in 2016 alone.

“While the government is trying to tell people what to buy, we've been working hard to offer the drinks and packaging consumers prefer,” McGorry adds.

PHILADELPHIA SOFT DRINK VENDORS SAY SODA TAX IS 'DEVASTATING' SALES

Overall, soda sales are still fizzling out in Philadelphia, but Coca-Cola has yet to publicly announce any upcoming layoffs in the area. The same can’t be said for Pepsi, which, earlier this month, announced plans to lay off up to 100 workers as a direct result of the tax.

"Unfortunately, after careful consideration of the economic realities created by the recently enacted beverage tax, we have been forced to give notice that we intend to eliminate 80 to 100 positions," Pepsi spokesperson Dave DeCecco announced March 1.

However, PepsiCo said they’d reinstate the workers if Philadelphia decides to repeal the measure, reports Vice.