Local juice maker halts production

Columbia International Food Products Inc., one of the country’s biggest candy manufacturers, has phased out its sugar-sweetened beverage product line, after it was rendered unviable following the implementation of higher taxes under the TRAIN Law.

Company president Reynaldo Y. Go said in a press conference they have decided to stop producing its beverage product “My Juice” because the government was asking them to pay R7.20 in excise tax for its R7.05 juice.

Go finds it unconscionable that the tax was higher than the cost of “My Juice”, a 25-gram powder juice format that had been competing in the market for the past 15 years.

“If we increase our prices, no one is going to buy our product anymore because we become so expensive already, so we stopped producing ‘My Juice’ in January this year,” he said.

With the closure of the beverage product, Columbia lost R15 million in inventory and around R120 million to R200 million in sales.

He lamented the government’s insufficient consultation with the industry in the passage of the first package of the comprehensive tax reform program.

According to Go, the government should better tax online gaming, not sugar sweetened beverages and candies, which, he said, are “poor man’s luxuries”.

The entire confectionery sector is also depressed because the purchasing power of Filipinos has been weakened due to the TRAIN Law, he said.

Despite the closure of its juice product, Go said Columbia still has over 100 SKUs (shelf keeping units) mostly candies, but said if the slump in sales continues they may be forced to review their product offering to be able to concentrate on the growth drivers. Doing so, he said, would result in contraction in production volume and reduction in the number of employees. Columbia currently employs 2,000 workers.

Already, the Philippine Confectionery Biscuit & Snacks Association (PCBSA) where Go is chairman has asked the government that they be allowed to directly import sugar because the local sugar has reached an all-time high of R2,900 per 50-kilogram bag as against the landed imported sugar of R1,200.

The 18-member group PCBSA said the high sugar would translate to as much as R8.5 billion in revenue loss from their sector since overall operation is expected to contract by 25 percent. Sugar accounts for 40-50 percent while others as much as 70 percent cost of material inputs among confectionery product manufacturers.