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Coca-Cola in swift U-turn over France tax row

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Coca-Cola in swift U-turn over France tax row
Steve Fuerst
09:41 CEST+02:00

Coca-Cola has backtracked from its announcement on Thursday that it was cutting a €17-million ($23.6m) investment in production facilities in the south of France after the government slapped a tax on sugared drinks.

Prime Minister François Fillon announced the tax on August 24th as part of a range of austerity measures designed to deal with France's swollen budget deficit.

Coca-Cola France reacted angrily, saying in a statement that the investment "must be re-evaluated in the context of uncertainty created by the tax."

The company announced it was cancelling a visit of Coca-Cola's global president, John Brock, to the site at Pennes-Mirabeau near the southern city of Marseille for the 40th anniversary.

"We want to make a symbolic protest against a tax that punishes our company and stigmatizes our products," the company said.

Legislators quickly attacked the company, with local parliamentarian Valérie Boyer describing the move as "blackmail."  Budget minister Valérie Pécresse described the move as "regrettable and incomprehensible." 

Media reports talked of Coca-Cola wanting to "punish" France for the tax, which would bring in €120 million in extra revenues and lead to a one cent increase on a can of the drink.

Later on Thursday, the company made an about-turn, blaming its French division for a "communication error."

"We regret the communication error made this morning by our French team, which spread confusion about Coca-Cola's commitments in France," Hubert Patricot, president of Coca-Cola's European division, told news channel LCI.

"We confirm our investment of €17 million in our plant at Pennes-Mirabeau," he said, also confirming that the 40th anniversary celebrations at the plant would go ahead.

Coca-Cola has five production sites in France and employs around 3,000 people.

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