TRAIN Law hastened drop in sales of sugar-sweetened drinks —Nielsen

Sales of sugar-sweetened beverages declined faster in February a month after the government implemented new excise taxes as part of the recently enacted tax reform law, consumer data analytics company Nielsen has said.

In a statement, Nielsen said the sales of sugar-sweetened beverages had been declining over the past years but the rate of decline went faster in February.

It said the accelerated rate of decline reflected the consumers’ typical reaction following a price increase.

Nielsen Retail Index data showed the sales volume of sugary drinks in sari-sari stores declined 8.7 percent in February 2018 from the 4.4 percent registered in the same month in 2017.

Powdered juice and powdered tea are showing double-digit declines.

Powdered juice at 15.4 percent in February 2018 from 1.7 percent in the same month in 2017; and powdered tea at 18.1 percent in February 2018 from 3.4 percent in the same month last year.

Sales of carbonated soft drink also recorded a faster decline to seven percent from 4.1 percent.

Nielsen Retail Index provides continuous tracking of product sales in defined retail outlets and is the industry currency in measuring a brand’s market share.

“While healthier and more convenient options contributed to the slowdown of sugar-sweetened beverage over the past year, we can attribute the faster rate of decline to how consumers have changed their consumption and shopping habits amid the first wave of price increases,”  Nielsen Philippines managing director John Patrick Cua said.

"This reaction from consumers is a normal and expected behavior immediately following a price increase.  Over time, some consumers may go back to old buying habits while some will adopt their new buying patterns," Cua added.

The recently-enacted Tax Reform for Acceleration and Inclusion law mandates a P6-per-liter tax on beverages using caloric and non-caloric sweeteners and P12 per liter on beverages using high-fructose corn syrup.

Nielsen said it conducted a syndicated qualitative study, "Kamusta si Juan at Aling Nena," to give context on how consumers react to price hikes brought about by excise taxes.

"Focused group discussions (FGDs) conducted among shoppers found that while they claim continuous purchase of these taxed drinks, they will adjust their purchase and consumption habits ranging from lessening the frequency of consumption, extending the use of products, and even taking items off their grocery baskets," it added.

In contrast to the sales decline in sari-sari stores of sugar drinks, Nielsen said the sales decline in supermarkets were less substantial at 9.4 percent from 14.7-percent decrease last year.

In supermarkets, energy drinks and ready-to-drink juice show significant declines at 10.7 percent from 3 percent and 8.8 percent from 4.7 percent.

“Impact is lesser and not as immediate in supermarkets because shopping trips and baskets are typically planned. In our FGDs, mid and upper class shoppers claimed that their shopping behaviors will not change as much, despite the higher prices. In comparison, declines in sales in sari-sari stores are more apparent since most impulse purchases happen in these neighborhood stores that also mostly cater to the low income segment,” Cua said.

As of February, prices of sugary drink across five categories carried by sari-sari stores increased by 20.6 percent, while prices in supermarkets increased by 16.6 percent.

“Since prices have increased for beverages and the purchase power remains the same for most of the mass consumers, people will find creative ways to stretch their budget," Cua said.

"Among these saving techniques include extending the usage of a product, reducing the consumption occasions of other products or even discontinuing the purchase of some personal items to make ends meet. Manufacturers and retailers can stay relevant in these challenging times by listening to what shoppers need and anticipating how they will change their behavior," he added. —NB, GMA News