The labour appeal court has endorsed the retrenchment of scores of workers by Coca-Cola Beverages Africa (CCBSA) in response to the introduction of a sugar tax, which caused the company operating losses.
- The National Union of Food, Beverage, Wine, Spirits and Allied Workers took CCBSA to court, but the court dismissed the application, saying the labour court applied the law correctly in ruling for CCBSA.
- CCBSA told the labour appeal court that it was forced to implement retrenchments due to the financial pressure exerted by the sugar tax, which compelled the company to pay R2.1 billion in sugar tax and provide R850 million worth of discounts, while sales volumes fell 2%.
- These factors caused a R293.8 million drop in profit for CCBSA, which was servicing about 190,000 clients weekly, with just 80,000 clients providing 90% of the volume.
- CCBSA embarked on a strategy to reduce costs regarding small outlets and invest in big revenue outlets, a process that also led to job losses.
- The union sought to appeal the retrenchments, believing they constituted a breach of merger conditions, but the court found CCBSA’s response to the crisis was rational and reasonable.
- The legal warfare involving CCBSA, which accounts for about 40% of all Coca-Cola sales in Africa, comes as the company is planning to list on the JSE, with the listing worth an estimated $8.1 billion.