ECONOMYNEXT – Sri Lanka’s John Keells Holdings group, which makes Elephant House branded soft drinks said sales of soft drinks plunge 23 percent in the December 2018 quarter from a year earlier, following a sugar tax.
"The decline in beverage volumes is due to the implementation of the sugar tax on CSD (carbonated soft drinks), which resulted in substantial price increases across the industry," the firm told shareholders in a quarterly report.
"However, it is encouraging that the growth in monthly volumes within the quarter has been on an upward trend."
Sugar taxes are a new European interventionist fad which gives unlimited potential room for the ruling class backed by a standing army and police to impose their vicarious desires on an unarmed citizenry, as obesity rose especially among rich kids, who are not getting enough exercise.
"The UK has one of the highest obesity rates among developed countries and soft drinks are still the biggest source of sugar in children’s diets," the British Treasury said after starting the sugar tax.
"Revenue collected from the levy will help fund physical education activities in primary schools, the Healthy Pupils Capital Fund and provide a funding boost for breakfast clubs in over 1,700 schools."
It is not clear whether the volume decline in Sri Lanka came from declining consumption by rich kids or thin kids of poor parents. Taxes were first implemented in rich countries.
Denmark started a sugar tax in the 1930. Modern feel-the-pain taxes were started in countries like Finland and followed up by Hungary. Denmark also introduced a fat tax. Both have since been abolished.
Research in Mexico, which has a bad central bank with higher levels of inflation and currency depreciation with more poor people, has suggested sugar taxes work mostly on the poor.
In general, taxes on foods hurt poorer segments of the population most.
The tax has also made products made from unnatural sweetners cheaper pushing poor consumers in particular into chemical sweetners with no calorific value.
In South Asia, people have traditionally consumed more carbohydrates such as rice in place of proteins.
In Sri Lanka, protein prices are also kept up articially high levels to give profits to maize farmers and an oligopoly of collectors with political connections, keeping poultry prices high. (Colombo/Feb01/2019 – Updated with UK Treasury comments, historical data – SB)