Coca-Cola FEMSA Philippines lays off 600 employees just weeks after sugar tax introduction

12-Feb-2018 - Last updated on 12-Feb-2018 at 08:19 GMT

Workers and union members have been staging protests at Coca-Cola FEMSA Philippines premises. ©FCCU-Sentro

Coca-Cola FEMSA Philippines is laying off 600 employees, blaming the move on the "regulatory environment" just weeks after the country introduced its sugar tax.

The joint venture company between the Coca-Cola Company and Mexican beverage company FEMSA officially announced this on 6 February, but employees claimed to have had their contracts terminated before then.

The Center for People's Media (CPM) by People's Media Advocacy Asia (PMAA), a grassroots labour issues advocacy network, said about 600 workers, or about 7.5% of the company's 8,000-strong labour force, would be laid off.

FoodNavigator-Asia's questions to Coca-Cola FEMSA Philippines about the numbers and specific details were left unanswered; the CPM said it would officially take effect on 2 March.

"In light of recent developments within the beverage industry and in the business landscape as a whole, the Coca-Cola System is undergoing an organisational structure assessment," Coca-Cola FEMSA simply said.

Protests by union and workers laid off

Large numbers of workers and union members have been staging protests at Coca-Cola FEMSA Philippines premises.

On 7 February, according to the CPM, more than 1,500 workers from the Federation and Cooperation of Cola, Beverage and Allied Industry Unions (FCCU-Sentro) held simultaneous protests in Manila, Canlubang, Iligan, Ilo Ilo and other Coca-Cola bottling plants and offices.

A statement released by the FCCU-Sentro said there was no prior warning or notice from the Coca-Cola FEMSA Philippines management when they fired these employees.

The retrenchment also took place while meetings between union leaders and the Coca-Cola FEMSA management were ongoing.

FCCU-Sentro said it would hold a series of protests until the management heeded their demands and sat down with the union to explore other options.

Coca-Cola FEMSA's response

Coca-Cola FEMSA said the restructuring process involved a comprehensive review of all the roles and responsibilities of the staff within Coca-Cola FEMSA.

"This restructuring has been a very difficult decision," the company added.

"It was carried out only after an exhaustive and conscientious assessment of the evolving regulatory environment, our operational efficiency, and consequent performance in the market.

"We are grateful for the valuable contributions of those who were affected and thank them for being part of the company," it said.

The company also promised to treat the affected employees with "dignity, fairness, and respect", and said all of them would be given career transition support and separation packages "that go beyond what is mandated by law".

In response to questions on accusations by workers that they were not informed beforehand, Coca-Cola FEMSA Philippines merely responded: "Coca-Cola FEMSA Philippines followed all legally mandated processes."

Its spokesperson added: "This is not a retrenchment. What we’re doing is a restructuring, which is why affected associates are to receive redundancy packages in the excess of what is provided in law."

The Philippines SSB tax so far

The sugar tax came into effect at the turn of the year, with the Philippines' Department of Trade and Industry (DTI) instructing retailers not to raise prices until 15 January, as older stocks of soft drinks should not be affected by the SSB bill.

However, the tax brought about a wave of confusion in the Philippines' drink sector, with stores increasing prices of sugar-sweetened beverages (SSBs) from 2 January, on the "suggested retail price of the supplier".

The SSB tax comprises Ps6 (US$0.12) per litre on SSBs using caloric and non-caloric sweeteners, and Ps12 per litre on those using high-fructose corn syrup.

These includes powdered juices, energy drinks and soft drinks. The rate will be increased by 4% each year thereafter.

Previously, we reported that more than 300,000 people signed a petition by the Philippine Association of Stores and Carinderia Owners (PASCO), to oppose the government's sugar tax.

PASCO had said 40% of the daily income of small shop owners would be affected, putting 1.3 million micro-retailers at risk of losing their livelihood.

Meanwhile, the SSB tax has been lauded by the World Health Organization as "a great step forward in protecting the health of Filipinos".

Coca-Cola FEMSA is a joint venture between the Coca-Cola Company and Mexican beverage company FEMSA. It began in 1979, with a subsidiary of FEMSA having acquired a number of beverage bottling companies.

Today, Coca-Cola FEMSA is the largest franchise bottler of Coca-Cola products in the world. It has 66 bottling plants and 32 distribution centres in 10 countries, mainly in Latin America and the Philippines.