Philly Beverage Tax Blowback: Coca Cola Sales Plunge 32%

Tyler Durden's picture

Just a month after PepsiCo said it would lay off 80-100 people due to the 'unintended consequences' of Philadelphia's new soda-tax, Philly Coke, the local Coca-Cola bottler, has cut 40 jobs amid a 32% plunge in sales.

Since all of this is taking place as previewed in a recent post: "The 'Soda Police' Just Learned A Valuable Lesson About Taxes", we doubt it would come as a surprise to anyone, although we are confident that Philadelphia city workers will be amazed by these unexpected developments.

When Philadelphia became the first US city to pass a soda tax last summer, city officials were eagerly looking forward to the surplus-tax funded windfall to plug gaping budget deficits (and, since this is Philadelphia, the occasional embezzlement scheme). Then, one month ago, after the tax went into effect on January 1st we showed the tax applied in practice: a receipt for a 10 pack of flavored water carried a 51% beverage tax. And since  PA has a sales tax of 6% and Philly already charges another 2%, the total sales tax was 8%. In other words, a purchase which until last year came to $6.47 had overnight become $9.75.

What happened next? Precisely what most expected would happen: full blown sticker shock, and a collapse in purchases. According to Philly.com reports, two months into the city’s sweetened-beverage tax, supermarkets and distributors are reporting a 30% to 50% drop in beverage sales and - adding insult to injury - are now planning for layoffs.

A month ago, PepsiCo slashed jobs, blaming the soda tax...

With sales slumping because of the new Philadelphia sweetened beverage tax, Pepsi said that it will lay off 80 to 100 workers at three distribution plants that serve the city.

 

The company, which employs 423 people in the city, sent out notices and said the layoffs would be spread over the next few months. The layoffs come in response to the  beverage tax, which has cut sales by 40 percent in the city, PepsiCo Inc. spokesman Dave DeCecco said.

 

“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, including frontline and supervisory roles,” DeCecco said.

 

Outside of the North Philadelphia plant Wednesday, Ed Langdon, a 40-year employee  who shuttles products between warehouses, said the cuts are the most drastic he's seen in his time at Pepsi. Langdon said the writing was on the wall: Some colleagues who are paid on commission were seeing drastic cuts in weekly pay. "The trucks are going out and they're coming back with the soda on it," he said. "No one's buying it. It's just not happening."

And on Friday, as Phily.com reports, Coke did the same...

Philadelphia’s new sweetened-beverage tax has led to the loss of 40 Coca-Cola jobs and a 32 percent drop in sales, the company said Friday.

 

Fran McGorry, president and general manager of Philly Coke, the local Coca-Cola bottler, said in a news release that the job losses are due to commission-based employees leaving the company, not layoffs.

 

“We are not able to replace those positions right now,” he said. “In total, we have fewer people working in the city while more people are now working outside Philadelphia due to increased demand there. We have also made the decision not to hire seasonal employees for the summer months due to the negative impact the tax is having on our business.”

Lauren Hitt, spokeswoman for Mayor Kenney, stressed that fact when responding to the job losses and said the industry is “looking for opportunities” to make the tax a scapegoat. The Kenney administration lambasted the news, pointing to the industry's overall profits and the benefits of the expanded pre-K program that the 1.5-cent-per-ounce tax funds.

Anthony Campisi, a spokesman for a coalition of retailers, bottlers, and unions opposed to the tax, said it was unfair for the city to blame the companies for the job loss.

“It’s the mayor who’s to blame for the economic and human impact of the tax,” Campisi said. “And its offensive to blame the impact on Philadelphia businesses that are no longer sustainable because of it."

The beverage industry is suing to strike down the tax.

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garypaul's picture

so, drinking less of that shit is a bad thing?

takeaction's picture

Exactly...who drinks this garbage anyway?  If you complain about a sugar/soda tax...maybe you should be rethinking some things.

Dame Ednas Possum's picture

So these businesses' revenue model is based on society being obese and diabetic? Who'da thunk.

Next they'll be saying tobacco corporations are evil too. 

 

Shocker's picture

Put on new regulations = more layoffs. It always seems to work that way

 

Layoff List: http://www.dailyjobcuts.com

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Joe Trader's picture

I object!!!

40 lost jobs vs. 6 million peoples' health

Yes to organic foods!!

No to processed foods and no to fast carbs, or high glycemic foods!!

If people didn't eat like crap then the health care system wouldn't be as strained as it already is!!

Freddie's picture

+1  F**k Warner Buffert's Koka Kola.  The only worst poison is Pepsi's toilet cleaner.

The old old Mtn Dew was a southern citrus drink with orange juice.  It was great.  Pepsico bought is and made it poison.  I try to clone it with OJ and Fresca or DIet Sprite. 

All the diet soda are poison.  Mexican Coke has real sugar not that crap corn syrup,

I am trying to drop diet Coke but it is addictive as crack and about as poisonous.

Any healthy suggestions are appreciated.

espirit's picture

 

I only drink Diet Coke with aged Bourbon.

 

(-)Poison (x) (-) Poison == (+) Positive.

  

Shpedly's picture

Exactly!. Not plus not equals not.

TeamDepends's picture

Some enterprising entrepreneur should corner the local market. Hell, it's just water, sugar, juice of the poppy, perhaps a little E coli shit....

RagaMuffin's picture

Better yet bring back the original formula of Coke     ;-)

 

Fox-Scully's picture

How many snowflakes understand when you multiply two negative numbers the answer is positive.

RAT005's picture

Freddie, I used to drink 3 cans of Diet Coke a day.  One day I learned of the health poison effect and just stopped cold turkey.  Went one year with no DC.  Now get a mug a few times a year when driving a long way or something like that.

Here's a new fave:  Cut a lemon in half and squeeze each half into a glass.  Top it off with about 10 oz of tonic water.

This doesn't sound good but it's actually pretty good:  A couple stalks of celery ground up and slightly watered down.  A celery malt drink.  Filling and tastes okay.  Add a squeeze of lemon if you like.

And plenty of water instead of DC.  There is something addicive about DC.  You're thirsty, you drink a can, you're still thirsty you drink another can..... tough out the urge that drinking DC quenches your thirst....it doesn't :-(

Wrenching Away's picture

Just a note, tonic water is soda just like coke and pepsi, high fructose corn syrup and all. So its not any healthier.

dark pools of soros's picture

Diet Coke is like that shit they put in mouse traps that force them to seek water

Arnold's picture

You need to spice it up with bourbon.
Sounds like yuck.

Cephisus's picture

Look into making your own Kombucha.

HumanMan's picture

You're addicted to the sweetness. Juice has helped me out here. and it really quenches thirst. Probably gives me the same amount of energy ast the caffeine in a coke too.

This is always a leftist move, but it's not for lack of understanding the effects of the taxes. This is exacy how they want it, nobody drinking sugar in Philly. Since they can't just ban it, they'll tax it to death.

dark pools of soros's picture

They make the Throwback Moutain Dew with real sugar and it still has some OJ in it.

nmewn's picture

Its more of a freedom of choice thing.

Government shouldn't be "in the business of guiding peoples lives" through the tax code, that is to say, making choices for them by making products more expensive. The other side of that equation is, the laid off workers, which drives the laid off workers into the governments arms.

Which isn't necessarily a bad thing...if you work for the government ;-)

Krungle's picture

But government is already in people's lives in a million other ways, including picking winners and losers in the drug market. Why should sugary soda be given the nod, while I cannot buy cannabis in half the US legally, or DMT anywhere? But it's a big deal when the government maybe decides that corn syrup and Roundup are probably a lethal cocktail? And since government (via taxpayers) are paying for the choices of people that want to drink corn syrup and Roundup via their health care, why shouldn't they discourage the practice? Additionally, since government is deeply involved in aiding and abetting the corn syrup and glysophate industries, they've already decided to get involved in the lives of every American. So through their action or inaction on different fronts, the government has already made choices for the public. Why pick an actual poison as your libertarian fight?

bluez's picture

(Coka Cola) Former assets (Now owned by Pepsi Cola):

Columbia Pictures
Tri Star Pictures
RCA/Columbia Pictures Home Video (Half owned by RCA)
Coca-Cola Telecommunications
Embassy Pictures

https://en.wikipedia.org/wiki/List_of_assets_owned_by_The_Coca-Cola_Comp...

nmewn's picture

@ Krugle...

"But government is already in people's lives in a million other ways, including picking winners and losers in the drug market."

And how did that happen? Because nobody said a word, they let it happen, some even promoted it. 

"Why pick an actual poison as your libertarian fight?"

Because you cannot be a Libertarian and don't have a problem with .gov interfering with peoples choices?

omi's picture

I would agree with you as soon as gov't is not in the control of medial industry.

nmewn's picture

But that is the essence of it and the way to stop government interference.

For example, because you believe Coke is bad (you may or may not, this is only an example) you personally don't have a problem with .gov over taxing it out of the market place. If .gov attacks any one of us or anything we enjoy we should all rise as one and say no.

That never happens or rarely happens.

For the record, everyone here at must have thought I am 300lbs and drink Coke by the gallon (lol) when Bloomberg started this bullshit with Coke & sugar drinks (and salt and mayonnaise) and I started ranting about it calling him a fucking fascist (because he is). I'm not. 

It was always the principle of the matter, if you will not stand for what does not effect you they will be coming for what does. 

MD's picture

Coca Cola and Pepsi should be run out of business. Sugary shit contributing to the obesity epidemic in this country, adding hundreds of billions to public health costs. The government has every reason to run these assholes right into the ground.

Soul Glow's picture

Looks like I'm going to buy as much silver as I can tomorrow.  Keep the price dropping banksters, I'm all in.

Raffie's picture

Keep prices low forever so everyone can buy all they want and never raise the price so no one can ever sell.

Seems to be the motto of most stackers.

This shit has got to come to an end so we can be rewarded and rub it in the face of all the people who thought we was crazy.

I AM READY TO START MY NEW LIFE!

Silver, gold, Bitcoin and Ethereum are all in the ready position.

 

 

Shpedly's picture

Probably better off buying a truck load of "Purple" for the short and long term.

Arnold's picture

Drank.

It's wuts for beffuss.

Mini-Me's picture

You get less of what you tax.  Who can possibly be surprised by this self-evident fact?

Jack Oliver's picture

I doubt it's 'blowback' !

With 13 spoonfuls of sugar in every can - people have finally realised that this SHIT is killing them !!

Besides making Buffett the FUCKING muffett - RICHER !!

Giant Meteor's picture

With 13 spoonfuls of sugar, makes the medicine go down, makes the medicine go down, or come back up, but who's counting!

 

Bat Guano's picture

Clearly, the Coca Cola company is not happy about this.

MWgottaloveit's picture

Classic progressive logic.  Perhaps Detroit could save itself by taxing every new car off the line $2000.  Do these clowns and their base never learn?

juicy_bananas's picture

Put a tax on .gov incompetence.

OldTrooper's picture

They have.  It's your turn to pay.

undertow1141's picture

Kool-aid on the other hand is having record sales.

espirit's picture

+1

I see what you did there.

Bat Guano's picture

Bunch of preverts in Philly gubmint.

BlueHorseShoeLovesDT's picture

Good that shit is poison and increases health care costs for everyone.

PhilofOz's picture

Exactly....so people will still drink other more healthy products perhaps, and those lost jobs just filter through to other areas. I don't understand why ZH is pushing this issue as if bad, drinking that shit adds to everyones health care bills, not just users. I say tax it to oblivion just like Australia has taxed cigarettes to $1 a smoke!

Ex-Oligarch's picture

"more healthy beverages"?

The Philadelphia tax doesn't just apply to sugary sodas.  The tax also hits diet sodas, flavored waters, mixed fruit juices, iced teas, and ahost of other beverages.

Thrawn's picture

It is bad because it is a case of Government adding yet another hefty tax on its Citizens.

In a Free Society it should make no difference whether the tax is a cleverly-disguised ruse to extract more tax revenue or comes from a genuine concern from the Government to try to deter the People from making a "poor" desicion by tacking on an extra charge.

As far as Healthcare Costs are concerned:

If Government really cared about its Citizenry, they would look into a solution to inflated Healthcare prices caused by Medical institutions dealing with Insurance Providers.

Quite frankly many Medical Bills are shamefully overpriced by Healthcare Providers and encouraged by the Insurance companies because it makes us need the Insurance company just as much as we need the treatment.

And also because the Healthcare Provider has to pay expensive Malpractice Insurance to cover their ass.

Hmmm as a matter of fact big-Governments and Insurance Companies have similar business models: They are middle-men that add in another layer of cost under the pretense of an invented "need"

Of course, there are legitimate forms of Government and Insurance.

It's just, in their evil forms, they both have been exploited and levered to extract maximum revenue from their citizens and clients.

So, if this kind of shit is happening(like the soda tax in Philly), maybe our Society isn't so free after all.

Which is why this story is important and why ZH is valuable.

Mr. Universe's picture

When I was much younger than today I would ask someone who was perhaps older and wiser if I could do "this or that". Nothing criminal, but certainly a new twist on things. The response I heard was "go ahead, it's a free country". I don't hear that at all anymore these days.

Retired Guy's picture

So telling other people how to live is a good thing? Isn't that the root problem with government? I belong to me, not you or your government.

B1G mNy's picture

Oh this is awesome! The law of unintended consequences! Yet liberals will still not learn. Exibit B. Venezuela