Pepsi closes factory in Brazil and warm soft drinks war

São Paulo – the war between large companies of soft drinks and the federal Government continues. Pepsi announced earlier in the week the closing of your soft drink syrup factory installed in the Manaus free trade zone and may not be the only company to leave the region. The decision came after the Government reduce the tax incentives in the industry. For the Abir (Brazilian Association of manufacturers of soft drinks and non-alcoholic beverages), an organization that brings together 60 manufacturers, among them Coca-Cola, Pepsi, Ambev and Heineken, there are great chances of other companies do the same, especially the big ones. "The output of Pepsi is a very bad signal. What can happen is the dismantling of the Manaus free trade Zone gradually, "says Alexander Jobim, President of Open. In June this year, the Government Fear changed the recovery of IPC on the soda syrup. The change in the rule was as follows: the soda syrup went on to pay a rate of 4% of IPI, compared the 20% who were charged earlier. Apparently, therefore, is a reduction in tax. However, many companies in the sector, in particular the large, produce this syrup in the free zone of Manaus, with exemption of taxes. So the 20% of IPI that would be charged of these companies actually become credits to them. The topic has generated pressure from big business about the Government, and came to circulate the news that Coca-Cola threatened to leave the country. In an interview with the EXAMINATION at the time, the company denied. In September, Fear went back and increased the tax rate to 12% in the first half of 2019, and to 8% in the second half of next year. In 2020, the percentage is 4%. The Decree was a victory of soft drink companies, but appears not to have been enough. "The Government has to decide whether to continue with the free zone of Manaus. If the benefit stay at 4%, the operation does not stand and the companies are not going to be there, "says Alexander Jobim. The Association claims that the syrup production generates 14000 jobs in the region, direct and indirect. The Abir defends a 15% discount. The output of the large companies in the free zone of Manaus is positive for the market, in the view of the Afrebras (Association of Manufacturers of soft drinks from Brazil), an organization representing small producers of soft drinks in the country. The principal claims of unfair competition and accuses big companies to take advantage of the benefits offered to those who unduly produces in the region. "We are fighting for the four main manufacturers close [their units in Manaus]. A closed, "said Fernando Barrios, President of Afrebras. Contacted, PepsiCo said that the decision to leave the region "was taken with the objective of managing efficiently our operations throughout Brazil and position the company for long-term growth, regardless of the recent change in tax regime". The company claims that production will be redistributed to other plants of the company, but that was the only factory concentrates of Pepsi in Brazil; the product can be imported from Uruguay. The end of the factory led to the closure and 51 jobs.