A new beverage tax in Philadelphia is hurting restaurant and retail owners’ bottom lines and shoppers’ wallets. Coke’s business in the City of Brotherly Love is taking a hit, too.

“In retail and grocery stores, our volume is down 32 percent year-to-date in the city and dropping further each week,” said Fran McGorry, president and general manager of the local Coca-Cola bottler known as Philly Coke, adding that sales of low-and-no calorie beverages, are down close to 50 percent in Philadelphia. Teas and sports drinks also dropped 33 and 39 percent, respectively, year-to-date for the local bottler.

'In retail and grocery stores, our volume is down 32 percent year-to-date in the city and dropping further each week.'

Philly Coke has been in business for 115 years and is one of the world’s oldest Coca-Cola bottling operations. The company currently employs more than 700 people.  

“Some of our commission-based employees have seen their pay decrease 30 to 50 percent due to lost sales. This has caused people to leave Philly Coke voluntarily, and we are not able to replace those positions right now. In total, we have fewer people working in the city while more people are now working outside Philadelphia due to increased demand there,” McGorry said. “We have also made the decision not to hire seasonal employees for the summer months due to the negative impact the tax is having on our business.”  

He added, “Because of all this, our workforce in the city has been reduced by about 40 positions.” 

The Philadelphia City Council passed the beverage tax in June 2016 despite a poll showing that nearly 60 percent of residents were against it. This sentiment is consistent across most of the U.S.; over the last nine years, more than 40 beverage tax proposals have been rejected across the country.

Since January 1, Philly residents and small businesses have seen the tax’s wide impact. More than 1,000 beverages – from sports drinks and teas to juice boxes and zero sugar beverages – are impacted by the Philly tax. As a result, restaurants and stores have been forced to boost beverage prices, and others have reduced the variety of beverages offered to their customers. 

'Because of all this, our workforce in the city has been reduced by about 40 positions.'

Mom-and-pop shops have been hit especially hard. Philly Coke’s local beverage competitors have been hurt by the tax as well with some recently announcing job losses. “What makes this tax so devastating to small businesses and jobs is that it applies to beverages with bubbles and without bubbles, zero-sugar beverages and beverages with sugar. That’s pretty much everything we sell,” McGorry said.

As previously reported, Philly Coke is “de-emphasizing 2-liter and 12 pack cans” which is approximately 60% of the bottler’s volume sold in the city. Instead, they are continuing to emphasize 1.25-liter and 7.5-ounce mini-cans. Not only is this what consumers want, but these options represent a reduction in ounces per container of 38 percent, which helps reduce the impact to consumers’ wallets.

“It’s tough right now for sure, but we will continue to do everything we can to support our consumers, customers and employees,” McGorry said. “We hope City Council will listen to Philadelphians and get rid of this tax. In the meantime, our associates are pretty resilient. We’re going to keep working to do what’s right for our business and people. We aren’t going to back down until this tax is repealed.” 

Editor’s note: Job changes in Philadelphia are unrelated to recently announced changes to The Coca-Cola Company’s corporate organization globally. You can read more about those changes in this Q&A.