Pepsi sees improved sales volume this year

Pepsi-Cola Products Philippines Inc. (PCPPI) is looking to post better sales volume this year as the market has adjusted to the higher taxes imposed on sweetened beverages.

Allan Frias II, senior vice president for operations at PCPPI, told reporters the company hopes to see improved sales volume this year compared to last year when the new pricing of sweetened beverages took effect.

The company’s sales volume declined by as much as 20 percent last year as the business was impacted by the higher taxes on sweetened beverages slapped by the government under the Tax Reform for Acceleration and Inclusion (TRAIN) Law.

However, the firm still ended 2018 with higher net sales of P33.59 billion compared to P30.31 billion in 2017 due to the price increases driven by the excise taxes.

Lope Manuel Jr., vice president for legal, government and corporate affairs at PCPPI, said the Philippines is expected to recover much faster than other countries where sugar taxes were likewise imposed.

“You look at other countries like Mexico, it took them more than five years to recover from the effect of sugar tax. In the Philippines, the impact was felt last year. This year, the numbers are quite promising. So, we’re looking at a recovery period much shorter than the other countries that impose sugar tax,” he said.

Due to the implementation of the TRAIN Law, Frias said the firm had to trim its expenses and reduce capital expenditures to P2 billion last year.

For this year, Frias said the firm’s capex may come in higher than last year.

“Majority of our business relies on returnable glass. If the business will pick up, then, definitely we need to invest to recover our business using returnable glass,” he said.

As PCPPI is undertaking efforts toward sustainability with focus on water stewardship, circular economy and having an inclusive business, the firm has generated cost savings last year.

In particular, it had P23 million worth of cost savings from packaging innovations.

It also had P108 million worth of savings in terms of power costs due to internal and supplier energy initiatives.

PCPPI is aiming to reduce its water use by 10 percent, improve electricity use and fuel consumption by five percent each, and improve solid waste management by 85 percent next year.

PCPPI, which has been operating since 1989, is behind well-known food and beverage brands such as PepsiCola, Mountain Dew, 7-Up, Mirinda, Mug, Gatorade, Tropicana, Lipton, Sting, Premier, Milkis, Aquafina and Cheetos.

The firm has 14 bottling facilities across the country, serving more than 700,000 outlets.