With IPI, sale of soda goes up to 3%

The soft drink industry won a jerk yesterday, with the resumption of the reduction in the rate of the tax on industrialized products (IPI) for the manufacture of soft drinks that contain fruit juice or extracts of Guarana seed and Acai.
The IPI rate for beverage made Acai based or Guarana shall be reduced by 50%. For soft drinks with fruit juice, the reduction shall be 25%. The IPI separately for the two categories was practiced since 1974 and has been suspended by the Government in September 2012. Between October and mid-May was applied to full rate.
From now on, the Guarana soda resumes the same index last year's reduction. Already those containing fruit juice will have smaller rate reduction-formerly also had 50% discount. The measure came into force yesterday, with the publication in the Official Gazette.
The Brazilian soft-drink market, which shrank by 0.6% in volume in 2012, to 16.1 billion liters, must move between 2% and 3% this year, according to the projection of the Brazilian Association of soft drinks and Alcoholic drinks (Abir).
To the Vice President of Abir and Director of Kirin Brazil, Jose Francischinelli, the smaller tax "will bring a reduction around 5 cents per litre of Guarana soda and 2.5 cents per litre of soft drinks of other flavors for manufacturers".
Marlene de Oliveira, Deputy Executive Secretary of the Ministry of finance, said yesterday that the tax waiver arising from the measure will be of R $ 257 million in 2013 and $ 285 million in 2014. According to him, the goal is to encourage tropical fruit products, as well as small producers of soda. "It was a general election, but enjoys the small producers," he said.
In a market that is the third largest in the world by volume, after United States and Mexico, not just the tax rate reduction will be beneficial to the resumption of growth. "The timing of events such as the FIFA Confederations Cup and the World Cup should positively influence and bring a slight improvement for 2012," said Francischinelli.
The advancement of soft drink consumption is also threatened by competition with non-gaseous beverages healthier appeal. In 2012, sales of ready-to-drink nectar reached 700 million litres, a high of 15.8%. Soy-based beverages advanced 14%; isotonic 9.3% and 25.5% energy.
Ambev, the largest beverage manufacturer in the country and owner of Guarana Antarctica, did not comment to IPI reduction. Coca-Cola Brazil reported in note that is analyzing the impact of the new tax rates.
Soft drink market, which grossed R $ 53.9 billion in 2012, 54% correspond to 20% cola beverages based on Guarana and the remainder contains fruit juices (Orange, grape, lemon, pineapple, passion fruit and Apple) in its composition.