Demand for soft drinks, tobacco falls on selective tax: businessmen

Demand for tobacco, energy drinks, and soft drinks has declined significantly since the imposition of selective tax in Saudi Arabia last month, businessmen told the Okaz newspaper.

Tobacco demand has dropped by 50-90 percent for some brands, as sales stands at SAR 100,000 weekly compared to SAR 2 million before the selective tax was imposed, said businessman Ahmed Al-Zaher.

Merchants and consumers both stocked large amounts of products before the tax was imposed, he said, adding that sales will likely return to normal within two to three months, once they run out of stock.

Meanwhile, sales of energy and soft drinks have fallen by half, compared to the period before the tax was imposed, businessman Ali Ahmed aid.

Saudi Arabia introduced a “sin tax” on the consumption of several products deemed harmful to health in June, including cigarettes, and energy drinks.

A 100 percent tax has been levied while on tobacco products and energy drinks, while a 50 percent tax has been applied to carbonated soft drinks.

This selective tax is a precursor to the broader Value Added Tax (VAT) system that is scheduled to be rolled out early next year.