Jobs at risk as Coca-Cola reels from sugar tax
The jobs of more than 1,000 people may be on the line as Coca-Cola Beverages SA embarks on restructuring.
The company said this week it is reeling from the effects of the sugar tax imposed on sugary drinks from April last year.
In a section 189 notice to the Food and Allied Workers Union, Coca-Cola Beverages SA said prior to the implementation of the sugar tax, volume growth expectations were at 4% a year. The tax as well as "economic headwinds" had resulted in lower volumes, which the company said were only expected to recover in 2021.
The "health promotion levy" was introduced to curb the consumption of sugary beverages and generate much-needed tax revenue.
The levy, fixed at 2.1c/g of sugar content exceeding 4g/100ml, affects sugary beverages manufactured in or imported into SA.
The tax raised R2.3bn by the end of December 2018, Treasury said.
Coca-Cola said it increased prices in response to the tax, but competitors maintained pre-levy prices, which cost Coca-Cola Beverages SA market share. In addition, weak consumer spending resulted in muted volume growth.
The company has cut the sugar content in its beverages by 20% across all brands.
Coca-Cola Beverages SA employs 7,100 people and retrenched 76 employees in the past year.
"We anticipate that just over 1,000 jobs may be impacted," said Tshidi Ramogase, public affairs and communication director at Coca-Cola Beverages SA, commenting on the latest retrenchments.
The job cuts include logistics and warehouses where "the activity level has reduced significantly as a result of the reduction in volumes", the notice said.
Those who could be affected include 117 warehouse operators, as well as clerks, shunter drivers, janitors, cleaners and scrub operators. Others that may be at risk are an estimated 650 merchandisers. The company also intends cutting pay for certain jobs.
Ramogase said: "To clarify, this does not mean all impacted jobs will be retrenched. We are doing all we can to ensure that the impact on employees is minimised through alternatives such as redeployments, early retirements, voluntary packages, in-sourcing and, as a last resort, retrenchments."
Katishi Masemola, the general secretary of the Food and Allied Workers Union, said it opposed the retrenchments on the grounds that the company would be in breach of a 2017 order handed down by the Competition Tribunal when the Coca-Cola Company merged with Coca-Cola Beverages.
The conditions agreed upon by the merging entities included limitations related to job cuts.
The Competition Tribunal, in its ruling, said the merging entities should maintain employment levels for a period of three years from the date of approval.
It also prohibited the merging entities from involuntary retrenchments of employees in the bargaining unit.
But the company said that the proposed retrenchments were not specific to the merger and were not in breach of its conditions. It said the intended job layoffs were "a result of operational requirements" that have arisen in the course of business.
"We appreciate the uncertainty this process may cause and we will endeavour to manage it in good faith," Ramogase said.
Masemola said: "Should they proceed with the intention to retrench, we'll obviously take legal action, but also use our collective power to go on strike or to do anything possible within the laws of the country to make sure those retrenchments do not happen."