18 July 2017
Saudi Arabia has seen the sale of soft drinks drop by nearly 30 percent since the sector was hit by increased taxes last month, a local newspaper reported, adding that energy drinks sales also plunged by 60 percent in both retail and wholesale stores. Saudi Arabia started implementing 100 percent selective tax on tobacco and energy drinks and 50 percent on soft drinks starting June 10. The move of the tax boost is for health reasons, to encourage people to opt for healthier options, and to boost government revenues.
Consumers have already started to shift their consumption patterns and look for cheaper alternatives, although soft drinks companies lowered the price of the small can from 2.25 Saudi riyals to SAR2 following the sharp drop in sales, Al Madina newspaper reported.
Tobacco sales did not see any significant decline after the tax was introduced, the newspaper added, but it pointed out that low income workers have started to shift to cheaper and smaller products.
The kingdom’s new selective tax is expected to raise between 8 billion Saudi riyals and 10 billion Saudi riyals annually, according to Reuters.
© Zawya 2017
Saudi Arabia has seen the sale of soft drinks drop by nearly 30 percent since the sector was hit by increased taxes last month, a local newspaper reported, adding that energy drinks sales also plunged by 60 percent in both retail and wholesale stores. Saudi Arabia started implementing 100 percent selective tax on tobacco and energy drinks and 50 percent on soft drinks starting June 10. The move of the tax boost is for health reasons, to encourage people to opt for healthier options, and to boost government revenues.
Consumers have already started to shift their consumption patterns and look for cheaper alternatives, although soft drinks companies lowered the price of the small can from 2.25 Saudi riyals to SAR2 following the sharp drop in sales, Al Madina newspaper reported.
Tobacco sales did not see any significant decline after the tax was introduced, the newspaper added, but it pointed out that low income workers have started to shift to cheaper and smaller products.
The kingdom’s new selective tax is expected to raise between 8 billion Saudi riyals and 10 billion Saudi riyals annually, according to Reuters.
© Zawya 2017
