Soft drinks stall in France as consumers trade down: Canadean


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Soft drinks volumes have fallen in France since the introduction of punitive taxation (Picture Copyright: Nicholas Liby/Flickr)
Soft drinks volumes have fallen in France since the introduction of punitive taxation (Picture Copyright: Nicholas Liby/Flickr)

Related tags Coca-cola

The French soft drinks industry has been hit hard by the government’s introduction of a tax on sugar-sweetened drinks, according to market research firm Canadean, with consumers trading down to cheaper, lower-sugar beverages.

The tax affects both drinks with added sugars and drinks with artificial sweeteners. It came into force in January 2012, and is set at €7.16/hectoliter (around €0.024 for a 33cl can), payable by manufacturers established in France and importers.

 The tax was levied by President Francois Hollande’s Socialist government in one measure aimed at curbing the French fiscal deficit, and combatting a rising obesity epidemic.

Figures on France soft drinks volumes from 2009 to 2013 – compiled by Canadean show growth of around 1.92% in 2009, 2.94% in 2010, a slight fall in growth to 2.05 in 2011, then a market in decline 2012 (-0.03%).

Coca-Cola Enterprises shakes up pack offer

Canadean predicts that volumes will fall slightly more in 2013, tailing off by 0.15%.

During an investor call to discuss Coca-Cola Enterprises’ Q4 2012 results in February, Hubert Patricot, president of CCE’s European group admiteed that volume declines in continental Europe were “primarily driven by the impact of the excise tax increase in France, which notably impacted pricing, put pressure on the customer marhin and created a high previous year hurdle”.

Patricot said CCE planned to introduce new pack sizes in France to reverse volume declines: a 1-liter PET bottle and a “lower entry-points package…pretty important in the current environment”​, alongside new products such as Cherry Coke Zero and Fanta Peach.

Canadean warned that in light of the tax regime, and “general economic malaise facing France”, ​consumers had cut their consumption of higher-priced beverages.

“A trend of trading down to less expensive, lower sugar products has been seen in the country over the last 12 months,” ​the research firm noted.

Significant short-term growth recovery unlikely

And despite CCE’s initiatives to kick-start growth, Canadean warns that, without a change of heart at government level, significant growth recovery in categories such as carbonates, juices, nectars and still drinks is unlikely to be seen in France in the short-to-medium term.

Energy drinks escaped further sumptuary taxation (€50/hectoliter), when the French Conseil Constitutionel (Constitutional Court) struck down legislative plans​ for lacking an ‘objective and rational criterion’.

“As a result, Canadean forecasts further impressive growth in this category in the coming years, bucking the overall negative trend seen in the market as a whole,”​ the research firm said.

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1 comment

Soft Drinks Shouldering the Weight of the Obesity Problem

Posted by Emma Hyatt,

Why not tax all foods with added sugar? Legislation like this takes the onus off of personal responsibility for our own health. Taxing alcohol in Canada didn't get rid of alcoholism and binge drinking. Taxing sugary drinks will not wipe out the obesity problem. Only time will tell...

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