The soft drinks price hike will have a strictly negative effect on the economy. This is what General Manager of Jermuk International Pepsi-Cola Bottler LLC Gurgen Narimanyan said during a March 6 press conference.

“Prices for products under a high price category will go up by 12-15%, while the prices for products under a low price category will go up by 30-40%, and this will obviously reduce sales and companies’ revenues and cut jobs. This is the first stage of the consequences,” he stated.

According to Narimanyan, glass and plastic bottle and sugar and raw materials suppliers, 70% of which, according to Narimanyan, are local companies, will also suffer from the price hike.

“By taxing soft drinks with VAT, the government plans on obtaining AMD 3 million, but reduction of the entries into the state budget will have a more negative impact,” the company’s general manager said, adding that this will also lower investors’ level of confidence and reduce the attractiveness of the given sector.

Public Relations and Communication Manager of Coca-Cola Hellenic Bottling Company Armenia CJSC Elina Margaryan complained that the company doesn’t understand the government’s decision that all soft drinks are considered unhealthy.

The soft drink producing companies suggest setting up a task force that will explore the economic effect of the change that is proposed and the impact of soft drinks on health to see whether it really has a negative impact or not.

The draft Law of the Republic of Armenia “On making amendments and supplements to the Tax Code of the Republic of Armenia” — put into circulation — envisages expanding the scope of products subject to taxation under the excise tax starting from 1 July 2019, prescribing drinks containing 5 or more grams of sugar in 100 grams of a drink as a new sub-excise product. The draft law also states that this concerns all soft drinks.