7-Eleven unperturbed by sugar tax implementation

29 May 2019 / 15:13 H.

KUALA LUMPUR: 7-Eleven Malaysia Holdings Bhd does not expect the impending sugar tax to affect its top line and bottom line, said its CEO Colin Harvey (pix).

Based on discussions with its business partners, Harvey said manufacturers are either planning to raise prices, absorb the extra cost or reformulate their products while some are re-strategising to push low-sugar or sugar-free variants.

“Now what you will see is Coca-Cola pushing their Coke Light and Coke Zero, and you will see everywhere, Pepsi Black Vanilla, Pepsi Black and Pepsi Black Ginger. The manufacturers are quite smart in terms of their marketing strategies,” he told reporters after its AGM today.

He noted that some sugar free products are out-selling sugar products and based on its April sales, products like Pepsi Black and Pepsi Black Ginger have been selling well. He said sugar free products have caught up with sugar products compared with three to four years ago when sugar free variants made up only a fraction of the sugar products.

“If sales volume start to drop, we will get in touch with the manufacturers and they’ll have to do something to drive up their sales. They need to grow their businesses and we are a reasonably sized customer for them,” he said.

Effective July 1, the government will impose a 40 sen per litre excise duty on drinks that contain more than 5gm of additional sugar or sweeteners per 100ml and fruit or vegetable juice that contain more than 12gm of sugar per 100ml.

Commenting on consumer sentiment and its impact on the group’s sales, Harvey said retailers need to meet customers’ needs whether consumer sentiment is positive or negative.

“I would like to think that if consumer sentiment is high, they shop more with us. If consumer sentiment is low, customers tighten up their wallets and they don’t want to drive too far to supermarkets so they shop with us,” he said.

He said the group’s focus is on fresh food, which contributed 2.6% of its total sales last year and has grown to about 3.6-4%. He said the growth is encouraging and hopes to see fresh foods contributing 10% of total sales. The group will also continue to expand services offered to customers.

“We see ourselves as the bank of the future, we see ourselves as the courier of the future. Not doing banking but like post offices and such where you can do all your bill payments, pay your assessments, book tickets in other countries. We see opportunities for 7-Eleven, being open 24 hours, to offer true convenience to customers,” he added.

The group will open 150 to 200 stores and refurbish at least 100 to 150 stores per year. According to Harvey, there is capacity to open up to 4,000 stores in Malaysia based on population growth.

As for the potential de-listing of 7-Eleven, he said it is the personal view of Berjaya Corp Bhd founder and executive chairman Tan Sri Vincent Tan, who has not discussed the idea with 7-Eleven’s board of directors.

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