MOSCOW (Reuters) – A proposed new sugary drinks tax has forced a proposed new sugary drinks tax to reduce its investments next year and freeze employment for 1,000 new jobs, Russia’s Chernogolovka soft drink maker hopes to capture market share as Western competitors leave, the company said.
A parliamentary committee last week gave preliminary approval to budget proposals that would impose an excise tax on drinks containing a certain percentage of sugar at 7 rubles ($0.1135) per liter from January 1, 2023.
“The company’s investment program for 2023 will be reduced by 5 billion rubles, which will lead to the freezing of 1,000 new jobs,” Chernogolovka said in a statement late Monday.
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“This decision is due to the economic uncertainty caused by the introduction of a selective tax on non-alcoholic beverages, which forms the basis of the group’s product range,” Chernogolovka said.
The company said it was “extremely pessimistic” in its assessment of the soft drink market for 2023-25, fearing production would be 20% below current levels.
“The decision will affect the company’s main investment project in the Moscow region, the project to build a factory in the Volga region and the project to expand production in the Krasnodar region,” she added.
Chernogolovka told Reuters in August it was targeting a 50 percent share of Russia’s soft drink market of about $9 billion as Coca-Cola cut operations. The company began manufacturing Cola Chernogolovka in May.
Production of PepsiCo (PEP.O) and Coca-Cola continued for several months after the two companies pledged to halt it in March after Russia sent tens of thousands of troops to Ukraine.
Interfax reported that Chernogolovka was hit last week when an intellectual property court ruled that its trademark “Vantola” infringed the Coca-Cola trademark “Fanta”, overturning an earlier ruling by the state intellectual property agency Rospatent.
This legal dispute began before the Ukraine crisis.
(1 dollar = 61.7000 rubles)
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(Reporting by Olga Popova and Alexander Marrow) Editing by Mark Potter
Our Standards: Thomson Reuters Trust Principles.
Originally published at San Jose News Bulletin
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