CHANGING the hearts and minds—and yes, the taste—of Filipinos when it comes to sugar-sweetened beverages (SSBs) could be “bittersweet” for the economy.
With a penchant for all things sweet, Filipinos would have to face the reality that consuming these products, especially SSBs on a regular basis, could not only place their health at risk, but could also be a drain to their pockets as well.
The recent increase in taxes for SSBs—courtesy of the Tax Reform for Acceleration and Inclusion (TRAIN) Law—has already affected their consumption. And now, with President Duterte leading the way, these SSBs will soon carry health warnings that could further erode consumption.
“It will likely affect the whole chain down to one million sari-sari stores,” University of Asia and the Pacific Center for Food and Agri Business Executive Director Rolando Dy told the BusinessMirror.
Consumption
National Economic and Development Authority (Neda) Undersecretary for Planning and Policy Rosemarie G. Edillon said regulating sugar consumption can be effectively done through taxes.
This has been observed in other countries such as Mexico when it slapped a 10-percent excise tax on sugary drinks: Consumption dropped by 7.6 percent.
Edillon said the impact in the country would be significant, given that the country’s consumption of SSBs is high. She said that in 2005, Filipinos’ Coca-Cola consumption reached 151 servings per capita per year. This is more than twice the global average of 77 servings per capita.
This is supported by local data. Based on several Family Income and Expenditure Survey (FIES) results, the Philippine Statistics Authority (PSA) said families have seen a steady increase in spending for nonalcoholic beverages from 2003 to 2012.
In 2003 Filipino households spent P29.5 billion on nonalcoholic beverages. Of this amount, around P16.1 billion was spent on carbonated drinks, while P8.24 billion of the amount was spent on fruit juices and noncarbonated drinks.
The spending on nonalcoholic beverages in 2006 almost doubled to P34.18 billion. However, there was a slight decline in spending for soft drinks at P16.06 billion, but an increase in the expenditure for fruit juices at P10.15 billion.
The increase continued in 2009, with households spending as much as P44.09 billion on nonalcoholic beverages. There was a marked increase in the spending for soft drinks at P17.32 billion and in the consumption of fruit juices at P14.63 billion.
In the latest FIES in 2012, families spent P62.61 billion on nonalcoholic beverages, now termed mineral water, soft drinks, fruit and vegetables juices.
While mineral water took the lion’s share at P23 billion, spending for soft drinks and fruit juices reached P18.63 billion and P11.54 billion, respectively.
It’s no wonder that the Philippines has the second highest points of sales for Coco-Cola FEMSA. Based on its 2017 annual report, Coca-Cola FEMSA reported that its highest number of points of sale was in Mexico at 835,430, but the second is in the Philippines, 818,502. The country is also the location of 19 of the 64 Coca-Cola FEMSA plants.
Consumption down with recent tax
In recent months, however, since the imposition of higher taxes for SSBs as TRAIN took effect on January 1, there was a contraction in the sale of sugary drinks, according to the Nielsen Retail Index (NRI).
The NRI showed that the average contraction in sales of these products in sari-sari stores was 8.7 percent in February 2018, as average prices in sari-sari stores increase by 20.6 percent.
Data showed that sales volumes of powdered tea and juices in sari-sari stores posted double-digit contractions of 18.1 percent and 15.4 percent, respectively.
The prices of powdered tea and juices sold in sari-sari stores increased 6.2 percent and 8.6 percent in February 2018.
As of February this year, sari-sari store sales of carbonated soft drinks declined 7 percent; energy drinks, 7.9 percent; and canned and noncanned juices, 7.2 percent.
“Watch the sales of sari-sari stores when labeling takes effect. It is already down with higher taxes,” Dy said.
Health warnings
While it was clear that sugary drinks lead to obesity, there’s insufficient data to support their direct link to diseases such as diabetes, according to Action for Economic Reform (AER) Senior Economist Jo-Ann Diosana.
Diosana said, however, that AER supported the move to increase taxes on SSBs because sugary drinks are a contributing factor to health risks such as diabetes.
Unlike tobacco use where there is no argument when it comes to its negative side effects, getting diabetes cannot solely be pinned on a person’s consumption of SSBs.
Diosana said some people could already be predisposed to diabetes due to genetics or that they already have Type 1 Diabetes, the cause of which is biological. Type 1 Diabetes is a condition wherein the pancreas of a person does not produce sufficient amounts of insulin.
This means placing labels can be tricky, Diosana added. If the government places a health warning that is not supported by studies or some form of evidence, this could spread wrong or fake information.
While using false information to back up the warnings will not have a negative impact on the health of Filipinos, it will adversely affect the health of the SSB industry.
“As long as there are studies that can support the warnings, I’m all for it. If you don’t drink sugar-sweetened beverages, nothing bad will happen to you. The danger is false information. This is the reason why there should be solid evidence to support the warnings,” Diosana said.
While the imposition of health warnings for SSBs may have come as a surprise to some sectors, Diosana said this may have been a side effect of the government’s efforts on tobacco control.
When Republic Act 9211, or the Tobacco Regulation Act, was passed in 2003, the industry was mandated to place health warnings such as “GOVERNMENT WARNING: Cigarettes are Addictive”; “GOVERNMENT WARNING: Tobacco Can Harm your Children”; or “GOVERNMENT WARNING: Smoking Kills.”
However, it took 10 years before the government was able to amend the law to include graphic warnings on all cigarette packs. Diosana said this was fast-tracked by the passage of the Sin Tax Law in 2012, which imposed higher tobacco taxes, among others.
The graphic warnings, nonetheless, were not as effective as the price increase when it came to curbing tobacco use among Filipinos—validating the conventional wisdom that people react more promptly when their bottom line is hurting. Diosana said smokers do not really pay attention to the graphic warnings, and some would even claim these warnings to be untrue.
The major impact of the health warnings were really on nonsmokers. Diosana said these warnings were enough to deter them from starting the habit because of the “shock factor” of the images.
Further, unlike cigarettes, all Filipinos consume sugar. This will make consumption regulation difficult. But, Diosana said, it certainly sends a strong message about consumer welfare.
“I think that will be the start of consumer empowerment. In the country, consumer empowerment is weak. We’re fed by information through marketing and not all of us try to be critical by the things that are given to us in the form of advertisement. So it’s also a good way to start empowering our consumers,” she said.
Multipronged approach
Diosana said many countries are now more conscious about placing correct labels, and the government’s recent policy actions track the same direction.
She said, however, more needs to be done to continue these kinds of reforms, especially since they aim to shape people’s behavior.
Countries around the world employ a multipronged approach that addresses various aspects of an issue.
In the case of tobacco control, apart from the tax, ensuring there are smoke-free spaces, measures to help in how to stop smoking, placing health warnings, and banning advertisements have been effective in cutting consumption.
This means, Diosana said, regulating the consumption of SSBs also means capacitating agencies and promoting greater coordination and cooperation between the Department of Health, the Department of Trade and Industry, the Food and Drugs Administration, and even the Department of Science and Technology.
These are crucial in changing the behavior of people and even the culture, especially when it comes to Filipinos’ sugar consumption habit.
“If you want to change behavior, it has to be a multipronged approach,” Diosana said. “Not everything about culture is right and good for people so more concerted effort is needed if you want to change the culture.”
Image credits: Kim146212 | Dreamstime.com