Two weeks ago we reported that the latest unintended casualty from Philadelphia’s soda tax would be at least 20% of Pepsi’s 423 employees in the city of brotherly love. According to the Philadelphia Inquirer, with sales slumping as much as 40% because of the new Philadelphia sweetened beverage tax, in the last week of February, Pepsi said it will lay off 80 to 100 workers at three distribution plants that serve the city. And since Pepsi employs 423 people in the city, it means that as much as 20% of its employees will be out of job due to a disastrous ordnance that was meant to provide additional municipal funding and instead will now lead to an increase in unemployment, coupled with a general decline in consumption, not to mention tax revenues for the city of Philadelphia.
The bottling giant sent out notices last Wednesday and said the layoffs would be spread over the next few months. “The layoffs come in response to the beverage tax, which has cut sales by 40 percent in the city, PepsiCo Inc.” spokesman Dave DeCecco said. “Unfortunately, after careful consideration of the economic realities created by the recently enacted beverage tax, we have been forced to give notice that we intend to eliminate 80 to 100 positions, including frontline and supervisory roles,” DeCecco said.
The layoffs would occur at plants in North Philadelphia, South Philadelphia, and Wilmington. The plants are run as independent businesses required to report profits and losses to the company.
And while Philly mayor Jim Kenney was quick to accuse Pepsi of being selfish, and putting profits over payrolls, that appears to be a losing battle as the local laborers promptly sided with the bottling giant. Anthony Campisi, a spokesman for a coalition of retailers, bottlers, and unions opposed to the tax, said it was unfair for the city to blame the companies for the job loss.
“It’s the mayor who’s to blame for the economic and human impact of the tax,” Campisi said. “And its offensive to blame the impact on Philadelphia businesses that are no longer sustainable because of it.”
But the straw that could break the municipal camel’s back in the deeply democratic city would be if the Teamsters – the backbone of any democratic administration – cry bloody murder, which they are starting to do. Danny Grace, secretary-treasurer for Teamsters Local 830, which represents many of the employees affected, said in a statement: “Our worst fears have been realized today. … This terrible news, although not surprising, is particularly disastrous for the members of Teamsters Local 830, who rely on a strong soda industry for their livelihoods.”
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Fast forward to today when it appears that the initial round of cost-cutting was very much insufficient, and according to CBS, Pepsi is now pulling 2-liter bottles and 12-packs of its products from Philadelphia grocery store shelves over the city’s new tax on sweetened drinks. The company says it wants to offer products and package sizes working families can better afford.
As described previously, the 1.5-cent-per-ounce tax on sweetened and diet beverages is imposed at the distributor level. If fully passed on to the consumer it amounts to $1.44 on a six-pack of 16-ounce bottles. The company’s decision affects sodas including Pepsi and Mountain Dew and other sweetened drinks like Gatorade and Lipton Iced Tea.
Democratic Mayor Jim Kenney’s office says the industry was trending toward smaller sizes well before the tax passed. Earlier this month, Purchase, New York-based PepsiCo Inc. cited the tax when announcing layoffs of 80 to 100 workers at distribution plants serving Philadelphia. Sadly, he seems unable to grasp that when it comes to volume consumers will just be force to buy more smaller soda containers.
But what is most troubling – and to Philadelphia’s democratic leadership, confusing – is that that no matter the passed-thru cost, Pepsi is simply unable to make a profit on any volume, or quantity, of soda, as there is simply no demand to cover the increased costs, and as a result the company has decided to pull two of the most popular size categories from the Philly market.
The result: not only has Pepsi commenced mass layoffs, not only have soda prices soared punishing everyone – not just those who allegedly abuse sugary drinks – but now all consumers just lost, with Pepsi limiting the choice of what they can and can not drink in such dramatic fashion. Meanwhile, Philadelpia’s mayor continues to pretend tht his brilliant plan is going according to plan.