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Philadelphia beverage tax prompts Pepsi to cut 80 to 100 jobs

PepsiCo Inc. says slumping sales from Philadelphia’s new sweetened-beverage tax are prompting layoffs of 80 to 100 workers at three distribution plants.

SeongJoon Cho/Bloomberg

PepsiCo Inc. says slumping sales from Philadelphia's new sweetened-beverage tax are prompting layoffs of 80 to 100 workers at three distribution plants that serve the city.

The company sent out notices Wednesday saying layoffs will occur at plants in north and south Philadelphia and in Wilmington, Del., The Philadelphia Inquirer reported.

Dave DeCecco, spokesman for the Purchase, N.Y.-based company that employs 423 people in the city, said the tax has cut sales by 40 per cent there.

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"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, in Philadelphia over the next few months, beginning today," Mr. DeCecco said.

The city blasted the news, with spokeswoman Lauren Hitt saying "the soda industry sunk to a new low today."

"They are literally holding hostage the jobs of hardworking people in their battle to overturn the tax," she said, adding that the company reported nearly $35-billion (U.S.) in gross income and $6-billion in profit last year. Hitt also said the company and the rest of the beverage industry had spent hundreds of thousands of dollars lobbying against the tax.

The 1.5-cent-an-ounce tax on sweetened and diet beverages is imposed at the distributor level. If fully passed onto the consumer, it amounts to $1.44 on a six-pack of 16-ounce bottles.

Philadelphia Mayor Jim Kenney said the tax, which was aimed at paying for nearly 2,000 pre-kindergarten slots and other programs, raised $5.7-million in January, more than double what city officials had projected.

The city also said Wednesday that its pre-K program has created about 250 jobs, through expanded teacher opportunities and support staff.

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