By Irfan Mohammed
PEOPLE in the Kingdom are bracing to spend extra money from Sunday when they want to consume soft or energy drinks and cigarettes as prices of these commodities are set to increase exorbitantly. Prices, in some cases, may go up by 100 percent as the Kingdom will be levying a tax introduced in a bid to tackle growing obesity and diabetes in the country.
The prices of popular carbonated drinks, commonly used by a cross-section of people including children, will rise by 50 percent. The 330 ml can (container) which is sold now at SR 1.50 will be SR2.25 from Sunday when the levy comes into force.
The prices of popular drinks remained stable in the Kingdom for decades. However, they were increased some time ago and now with the new tax the prices will further go up. The change in prices is also likely to pose coin problems as customers need to have 25 halala coins to add to the 2 riyals.
A leading international brand of soft drinks in the Kingdom reduced its quantity from 355 ml to 330 ml in can (container) and also informed shops about the change in price from Sunday. However, retailers were not aware of the price hike for family pack bottles of 2.25 liter size.
“I spend one riyal for the bread (commonly known as paratha) another one and half for Pepsi,” says Mohammed Shahad Khan, a Pakistani cleaner. He told that “With the increased price, I have to stop drinking Pepsi”.
“The salesmen told us about the increase in price and we expect that it will affect our sales to some extent,” said Nader Khan, Afghani restaurant operator.
“Since it is not round figure, a 25 halala coin can be a big challenge,” said Adnan, salesman in a grocery store.
Business sources say not only soft drinks such as Pepsi or Coca-Cola but energy drinks such as Code Red, Bison and Red Bull will give a bitter taste to their lovers as 100 percent tax will be imposed on these drinks.
Price for a 250 ml can of Code Red will be doubled from SR2 to 4. Other popular energy drinks, such as Red Bull, will be available for around SR10-12.
The Kingdom is the largest consumer of soft and energy drinks in the Middle East region. Due to the intensity of weather conditions, nature of social activity such drinks became essential part of beverage.
The GCC represents a $8.4 billion soft drinks market. Of that, with 68 percent of sales Saudi Arabia leads in the region.
Global giant Pepsi Co. had revealed that it would build a production plant in Jeddah which will be the largest in the globe.
Obesity is a growing concern in the Kingdom; a Ministry of Health study shows that 28.7 percent of the population suffers from obesity and 30.7 percent of students above the age of 15 are deemed overweight.
Media reports, quoting official sources, said that the new tax is likely to fetch SR 7 to 12 billion a year for the government.