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Sales of Taxed Sugary Drinks Dip Further as Consumers Alter Spending amid Price Hikes
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Sales of Taxed Sugary Drinks Dip Further as Consumers Alter Spending amid Price Hikes

While sales of sugar-sweetened beverages have been weakening in the past years, the accelerated rate of decline in sales in February or a month after the implementation of excise taxes reflects consumers’ typical reaction after a price increase.

Nielsen  Retail Index data shows more pronounced sales declines in sari-sari stores, with all five sugar-taxed beverage categories showing faster sales decline of an average of 8.7% in February 2018 vs 4.4% in February 2017. Powdered juice and powdered tea are showing double digit declines at 15.4% (vs. 1.7% in February 2017) and 18.1% (vs. 3.4% same period last year), respectively.  Carbonated soft drinks sales decline also accelerated from 4.1% last year to 7.0 % in February 2018.

In contrast, decline in sales in supermarkets are less substantial, slowing down by 9.4% in February versus 14.7% in February 2017. In examining the seven categories, energy drinks and RTD juice show significant declines with 10.7% (vs. 3% in Feb 2017) and 8.8% (vs. 4.7% in Feb 2017).

Since trips and baskets are typically planned by shoppers when they shop in supermarkets, the impact of price increases is lesser and not as immediate when compared with sari-sari stores. Mid- and upper class shoppers in a Nielsen qualitative report, Kamusta si Juan at Aling Nena, claim that their shopping behaviours will not change as much, despite the higher prices. In comparison, declines in sales in sari-sari stores are more apparent since most impulse purchases happen in these neighborhood stores that also mostly cater to the low income segment.

This early, manufacturers and  retailers should listen to the sentiments of shoppers about excise taxes so they can better strategize how to grow in this new business environment.  

ABOUT NIELSEN RETAIL INDEX

Nielsen Retail Index is a continuous tracking of product movement in a representative panel of retail outlets in the Philippines, numbering in the thousands. The panel includes supermarkets and sari-sari stores which are spread across Luzon, Visayas, and Mindanao. Clients use Retail Index to measure manufacturer and retail effort as well as consumer off-take.