Sermsuk seeks to reduce sugar content for new tax
SET-listed Sermsuk Plc (SSC), the maker of Est soft drinks, is revving up efforts to adjust product formulas in response to the new excise tax on sugar content.
Sermsuk president Lester Tan Teck Chuan said the company may reduce the quantity of sugar in existing beverages by half a gramme a year until it meets the government's requirements, or it may launch new drinks with lower sugar content in the market.
The new excise tax on sugary drinks, cigarettes, alcoholic beverages, and imported wine came into force Sept 16, 2017.
The tax per bottle of green tea will increase by an average of 1.13 to 2.05 baht, a can of coffee will see a rise of 1.35 baht, fruit and vegetable juices 0.06-0.54 baht per box, energy drinks 0.32-0.90 baht per bottle, and carbonated drinks with sugar will be taxed an additional 0.13-0.50 baht per bottle. The tax for carbonated drinks without sugar will be cut by 0.25-0.30 baht per bottle.
"We have learned from our networks in other countries that many have already reduced the sugar content in beverages," said Mr Tan.
"The level of sugar in Thailand's beverages is admittedly the highest in Asean. It will take about 10 years to reduce the sugar levels in each beverage to the levels used in Singapore."
Mr Tan said the company may try to use more natural sugar in its beverages, which will cost more.
He said the company also wants to beef up beverage exports to the Asean market.
ThaiBev sells non-alcoholic beverages in Thailand, Singapore and Malaysia and has recently entered Myanmar, Vietnam and Indonesia.
Est cola is among the company's five core brands that have steadily built a significant presence overseas, he said.
The company plans to ship Ranger energy drink to new countries including Cambodia, Laos and Vietnam. Last year this product was exported to Malaysia and China.
For Crystal drinking water, Mr Tan said the company has recently raised the growth forecast for sales by 8-10%, up from regular annual growth of about 5% a year.
"We became the market leader in Thailand's drinking water in June this year, ahead of our expectations, and we hope to continue our leadership in the long run," Mr Tan said.
The Crystal brand comprises a 21.5% share of Thailand's 35-billion-baht drinking water market.
The company aims to control a 25% market share in Thailand's drinking water segment over the next two years.
The SET reported Sermsuk fetched 8.41 billion baht in total revenue last year, down 25.7% from 11.3 billion in 2015. The company posted a net loss of 88.7 million baht in 2016. In 2016, revenue from carbonated soft drinks made up 41.8% of total revenue.