Malaysia Sugar Tax May Induce Price Hike For F&N Beverages

Monday, November 26th, 2018 | 983 Views

Following Malaysian finance minister, Lim Guan Eng’s announcement that an excise sugar tax will be enforced in 1st April 2019, F&N is anticipating a possible price increase of 90 percent for its beverages. This can be attributed to the fact that a majority of the company’s beverage products fall into the taxable categories.

However, according to Lim Yew Hoe, CEO of F&B Malaysia, further details on the sugar tax has to be unveiled before the company is able to fully assess its impact on the company’s beverage business. And he is currently projecting a possible price increase of between RM0.10 and RM0.60 based on the retail prices of RM1.20 for 250ml drinks and RM3.40 for 1.5L drinks.

Adding on to this, Lim has also commented that it would be more practical for manufacturers if the sugar tax can be implemented through different phases starting from 1st April 2019 as opposed to fully by the same date. As this would not only create a transition period for manufacturers to adapt and adequately reformulate their existing products to reduce its sugar content, it would also provide sufficient time for quality stability and consumer acceptance to occur.

According to Lim, “F&N has made significant efforts to reduce the amount of sugar in its total beverage portfolio. [And] as a result, the sugar index [for its products] has decreased 34 percent since 2004.” Moving forward, the company will provide healthier versions of all of its beverage products by 2020.