Business is not sugar – Newspaper Kommersant No. 194 (7395) of 10/19/2022

Failing to prove the untimeliness of the introduction of excise tax on drinks containing sugar by traditional appeals to the government, market participants moved to more decisive actions. Against the backdrop of consideration of the relevant amendments to the Tax Code in the State Duma, two major players – the Chernogolovka Group of Companies and the Ochakovo MPBK – announced a freeze on planned investments in new projects. In the case of Chernogolovka, we are talking about 5 billion rubles, which were planned to be invested in the construction and expansion of enterprises in several regions by 1 thousand jobs. And “Ochakovo” warns of a possible reduction in jobs by 25%.

The idea of ​​an excise tax on sugary drinks has been discussed for more than five years, but until recently, manufacturers managed to convince officials of the risks for the industry and the weak effectiveness of the measure. Thus, businesses pointed to the extremely low (1.5%) share of sweet soda in sugar consumption in Russia, the threat of rising prices and the illegal market. This time, my sources are indignant, business was not invited for consultations at all.

As one of my interlocutors notes, until recently the state itself was actively engaged in maintaining low prices for sugar in stores, and now it wants to impose an excise tax on sugary drinks under the pretext of concern for public health. “This is a bad signal for everyone, because in the future we can talk about excise taxes on sausage, fat sour cream, etc.,” he worries.

In September, Soyuznapitki outlined the arguments against the initiative in a letter to Prime Minister Mikhail Mishustin, the industry was supported by the Ministry of Agriculture. But, apparently, so far the scales are leaning in favor of the excise tax, which in 2023 should replenish the budget by 35 billion rubles. On Tuesday, October 18, the State Duma approved the amendments to the Tax Code in the first reading.

As the manufacturers themselves say, an excise tax of 7 rubles. per liter of sugary drinks will cause significant damage to their income, so the threat to stop investments is an absolutely justified move. One of my sources hopes that business will still be able to, if not convince officials to completely abandon the taxation of their product, then at least come to a compromise.

But this campaign carries great risks for its participants themselves. The fact is that the soft drinks market is extremely competitive: for 2021, the share of each of the two key multinational companies was estimated at only 5-6%. And the refusal of even a number of major players to develop in such conditions may become an opportunity for others to win over some of the consumers. Retailers can also start to expand the range in the segment through their own brands and imports. Then it will turn out that it will be much more difficult to return to investments in a market saturated with competitors.