Soft Drinks Will Be Charged with Excise, Issuers Will Raise Prices

TRIBUNBATAM.id - The government plans to tax various sweet drinks.

Through this policy, the government hopes to reduce sugar consumption in order to improve public health and increase state income.

With the imposition of this excise, a number of issuers that produce sweetened beverages are predicted to raise prices in order to maintain profitability, which will certainly have an impact on sales levels.

Bahana Sekuritas analyst Giovanni Dustin predicts that price increases will vary from 2 percent to 17 percent for various beverage brands.  

For issuers who produce fewer sweetened beverages with a target market of middle-upper class people, will be less affected than producers targeting the lower-middle class.

Previously, the Ministry of Finance had proposed a sweetened beverage product that would incur a tax of Rp 1,500 per liter for packaged tea.

This packaged tea production reaches 2,191 million liters each year, with a potential revenue of Rp 2.7 trillion.

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For carbonated products, an excise tax of Rp 2,500 per liter will be imposed. The carbonation beverage production is recorded at 747 million liters, with the potential for state revenue reaching Rp 1.7 trillion. 

Bahana said that several issuers that could be affected by the implementation of the excise tariff include PT Mayora Indah with the MYOR stock code, PT Unilever Indonesia with the UNVR stock code and PT Indofood CBP Sukses Makmur with the ICBP stock code.

Bahana estimates that ICBP will increase prices by around 10 percent - 17 percent for various types of beverages that are affected by excise, MYOR is expected to increase prices by around 4 percent to 6 percent, while UNVR will raise prices starting from 2 percent to 9 percent.

"UNVR also benefits because more and more people are migrating using premium products, which are currently the focus of Unilever," he added. (*) 

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