Coca-Cola is blaming Philadelphia’s new soda tax for falling sales, which have decreased 32 percent by volume from just a year ago.
Fran McGorry, president and general manager of local Coca-Cola bottler Philly Coke, told the Associated Press that the lost sales have forced the company to reduce its workforce of about 700 local positions by 40. These lost positions are not due to layoffs, but rather to commission-based employees voluntarily leaving the bottler after their pay decreased by up to 50 percent.
“We are not able to replace those positions right now,” McGorry wrote in a blog post on the Coca Cola website. “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, a spokesperson for Philadelphia Mayor Jim Kenney's office, said the industry's blaming of the soda tax is unfounded, noting that Coca-Cola has also announced the layoff of 1,200 workers nationwide due to falling sales.
“Coke had a bad first quarter and announced job cuts across all their markets earlier this week,” Hitt said. “This is likely just a part of that.”
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This announcement by Coca-Cola comes just a month after rival PepsiCo announced that it would be laying off between 80 and 100 of its 423 Philadelphia employees due to repercussions of the soda tax on the beverage industry.
Philadelphia first approved its soda tax last June. The measure, which went into effect at the beginning of this year, taxes each ounce of sugary beverages 1.5 cents. The tax applies to traditional soda as well as sugar-free soda, sports drinks, energy drinks, iced tea, sweetened coffee drinks, lemonade, sweetened water, plant-based milks, and fruit juices containing less than 50 percent juice.
Big Soda sued the city in April to invalidate the tax, and while a judge ruled against the suit in December, the industry filed an appeal one week later, which is still ongoing.
Philadelphia's soda tax has already brought in $19 million in revenue this year, with collections growing by nearly $1 million every month since January. The city hopes to bring in $92 million annually for education programs including expanded pre-K as well as parks and recreation centers.
A soda tax has also been enacted in Berkeley, Calif., where soda sales have also seen a steep decline, and soda taxes have been passed in Chicago, San Francisco, Oakland, Boulder, and Albany, California.