Zest-O mulls factory closure if losses continue

MANILA, Philippines — Homegrown brand Zest-O Corp. may close some of its factories in the country should losses continue to mount as a result of taxes levied on sugar-sweetened beverages under the TRAIN law and the soaring price of domestic sugar.

Chairman Alfredo Yao told The STAR the beverage manufacturer behind popular products like Zest-O juice drinks and fruit sodas has been hit badly by the excise tax on sugar sweetened beverages, resulting in double digit losses in sales in the first quarter. 

“Hopefully the market will get accustomed with the pricing. Meanwhile, sales have been on a decline. We are really affected,” Yao said.

With the excise tax already posing problems to the company, the increasing price of sugar is further rubbing salt into the wound, he said.

Further making things worse, he said, is if proposals for wage hikes get approved.

Yao said should these problems persist, the company may be forced to shut down some of its factories locally, resulting in job losses.

“Once we increase prices further, volume will suffer and go down then that’s automatic (closure and layoffs),” he said.

“If sales and demand really weakens then we cannot do anything. We try to maintain our people because they have been with us for so long so we try to (keep them). As much as possible, we will not lay off, but if prices will really increase and sales will weaken, then what can we do?” Yao added.

Yao said Zest-O currently has some 4,000 employees in its four factories in the country.

Founded in 1981, Zest-O has been a household name in the country. Apart from the Philippines, Zest-O also has production plants abroad.

The Philippine Confectionery Biscuits & Snack Association, a group of 18 producers of confectionery items, earlier said the price of domestic sugar has skyrocketed to as high as P2,790 per 50-kilogram bag as against the landed price of imported sugar at about P1,300 per 50-kg bag, prompting them to ask for government’s approval to import sugar.  

On Monday, Agriculture Secretary Emmanuel Piñol said the Sugar Regulatory Administration agreed to proceed with the importation by the private sector of up to 200,000 metric tons of sugar to curb the continuous price increase of the commodity.