Pepsi also acknowledged rise in suburban sales which calls into question reason for their lay-offs
PHILADELPHIA – In case you missed it, the Inquirer published an article on sales data from Coca-Cola and Pepsi in Philadelphia. The data showed that sales of smaller sized Coke products are up and called into question Pepsi’s public statements that the beverage tax has caused such steep sales declines that they have to lay-off employees from three regional distribution plants. Pepsi’s sales data shows that while sales within the city are down, sales in suburbs are up. As the Inquirer article points out, given the suburbs’ large size, even a small percentage increase in sales there could outweigh the lost sales volume within the city. In a telling sign, Pepsi refused to release data on their regional sales volume.
“This data shows that this tax is not causing the economic apocalypse the soda industry is claiming. In fact, it shows the tax is working exactly as it should,” said City Communications Director Lauren Hitt. “Consumers are switching to smaller sized soda which is better for their health and still supports soda industry jobs and desperately needed investments in quality pre-k, neighborhood public schools and parks, rec centers and library renovations.”
Numerous media outlets have also reported that the profit margin for soda companies on smaller sized products is actually higher than on their larger products. One such article from the Associated Press can be found HERE. The Inquirer article follows.
Coke, Pepsi fight soda tax with smaller bottles
Inquirer // Joseph N. DiStefano
Stung by falling sales at Philadelphia stores since the city started taxing soda and other soft drinks last fall, Pepsi and Coca-Cola are selling smaller containers that incur less tax.
Pepsi will be replacing 2-liter bottles with 1-liter bottles, which it called an example of the “products and package sizes working families are more able to afford,” spokeswoman Jennifer Ryan told me.
“We believe this will give our retail and foodservice partners the best chance to succeed in this challenging environment and will minimize the chance of product going out-of-date,” she added.
At Coke, sales are down in the city overall, but they are rising for smaller sized products: “In 2016, 7.5-oz mini-cans grew 9% and 1.25 liter bottles grew 9.5% and they are still growing this year, according to a statement by Fran McGorry, president and general manager of the Tri-State Operating Unit, Coca-Cola Refreshments.
Coke has moved to smaller sizes, “not because of cities passing beverage taxes, but because they’re what people want,” McGorry added. The trend began before the tax. company has diversified its products “to give people more choices and to help people manage their sugar consumption.”
Back at Pepsi, “Larger package” sales are down “more than 50%” in the city, and even more at some grocers, the company says. “Pepsi’s beverage sales are down 40% in the city and up only 10-15% outside the city.”
The suburbs are larger, so a smaller percentage gain can translate to a large increased sale volume. Pepsi and Coke didn’t provide estimates of the total changes in regional sales.
Even with the higher suburban sales, Pepsi is threatening to “eliminate 80-100 positions in Philadelphia over the next few months” if the tax isn’t reversed, and promising “to bring people back to work” if the city caves in. (Revised)