Coca-Cola reaffirms €17m French investment plan

By Ben Bouckley

- Last updated on GMT

Related tags Tax

Coca-Cola Enterprises (CCE) has reaffirmed its plan to invest €17m in its Les Pennes-Mirabeau facility in France.

Media reports yesterday stated that Coca-Cola France had suspended the investment following a government decision to increase value-added tax (VAT) on soft drinks with added sugar, as part of a new €12bn austerity package announced on Tuesday.

From January 2012, VAT on soft drinks will rise from 5.5% to 19.6% in a move that the French government believes will generate an extra €120m in tax returns.

Setting record straight

A regional company spokesperson said that the investment had “not been cancelled, but is being re-evaluated within the uncertain context created by this tax”.

However, in a statement released soon after, Hubert Patricot, European group president for CCE said: "We regret that our local team caused confusion … related to Coca-Cola's sincere commitment to France and the growth of its economy."

“I would like to set the record straight. We are re-confirming our €17m investment to our Les Pennes-Mirabeau facility.”

“Let there be no doubt, and let me say it as a Frenchman: Coca-Cola is committed to France. We employ 3,000 people here and have invested EUR260 million in France over the last six years.”

However, Patricot said CCE remained “strongly opposed to a tax that unjustly targets the purchasing power of the French people and one category of beverages under the pretext of addressing public health concerns”.

‘Stigmatisation’ opposed

A French website statement from the CCE said the tax hike could affect its activities in the country and 3,000 employees therein.

The tax would mean prices rose 3.5%, said CCE, since the tax followed raw material prices rises for inputs such as sugar, which has increased by about 40% in 12 months.

"As a player in the French economy, Coca-Cola shares collective efforts to reduce the public deficit. But we are strongly opposed to…stigmatisation of our products… unfairly considered as products such as spirits and tobacco,"​ the firm said.

Patricot said that consumer education on exercise and balanced diets, rather than “discriminatory taxes”​ should be preferred as a way forward.

He said CCE remained committed to working with government, nutritionists, and public policy experts to address ongoing public health concerns.

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