Saudi Arabia has seen the sale of soft drinks drop by nearly 30 per cent since the sector was hit by increased taxes last month, a local newspaper reported, adding that energy drinks sales also plunged by 60 per cent in both retail and wholesale stores.
Saudi Arabia started implementing 100 per cent selective tax on tobacco and energy drinks and 50 per cent on soft drinks from 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 eight billion Saudi riyals and 10 billion Saudi riyals annually, according to Reuters.
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