Coke and France fight over the ‘sugar’ tax
October 6, 2011
The U.S. drinks company has suspended an investment of 17€ million in its historic Pennes-Mirabeau plant near Marseilles in retaliation over the French new economic policies that want to obtain extra revenues by a new tax over "sugary beverages". Coke has invested 260€ million in France in the last fifteen years.
Coca-Cola executives are concerned about what they describe as government attempts to "stigmatise" their beverage as unhealthy in a similar way addictive substances in cigarettes. The past month the company also cancelled the celebration party of the 40-year anniversary of the factory, which produces 2 million litres a day.
It’s not the first time for Franco-U.S. trade disputes, not least Paris's decision in 2005 to make Danone, a yogurt maker, a protected industrial champion after talk of a €30 billion bid from PepsiCo, Coca-Cola's big rival. France also blocked Coke's bid for Orangina in 1999.
All these actions, Coca-Cola executives said, have been done "in a symbolic protest against a tax that punishes and stigmatises our company and our products". However, they insisted that the investment had not been cancelled but was being "reassessed" in order to decide what to do about the extra tax.
In turn, the French finance ministry stressed that "this tax of an extra centime [on a can of drink] does not endanger the industry", adding that the measure was "motivated by a public health goal".
Experts have noted that soda taxes could become a bigger problem for the company as cash-strapped governments look for additional revenue.
On the other hand, Coca-Cola has the support of other French beverage producers, and even the country's National Association of Food Industries (ANIA) said it "understood" the company's protest and expects other local players will follow their example.
In the last few years, legislators from different countries —mainly US— have been also considering a bottled water tax, which have started a strong ethic debate. The question —would a bottled water tax be ethical?— seems answered when French government explains that taxes for sugary beverages will benefit the consumer, as preventing obesity has direct impact on the sanitary budget. This benefit is already part of the fact: drinking bottled water is one of the healthiest things you can do for yourself.