Despite start of sin taxes, bar owners in high spirits

WHILE retailers are starting to feel the pinch of “sin taxes”, liquor shops in the city are still positive the law will not create a significant impact on their businesses.

Although they are left with no choice but to cope with higher prices, among notoriously price-sensitive Cebuanos, Prince Ernest Revilla, co-owner of Labeled Liquor Store and Bar on Escario St. in Cebu City, is optimistic the effect is temporary and that they will maintain their target market and revenue.

He said the impact is not yet evident as weekends are still busy days for the shop, despite the end of the school break and holiday season. But Revilla is expecting sales would be affected after the new pricing scheme under the law is fully applied.

He is confident good business will resume as soon as the core purpose of the law sinks in with consumers.

Revilla is pro-sin tax and hopes the government is committed to the intention of the law, especially on investing revenues in public health.

Domino effect

Christian Jules Uy, finance and marketing director of The Gool Bar (TGB) along Junquera Ext. in Cebu City, agreed that people will eventually adapt the changes brought by the tax.

TGB will pass on the tax’s effect to consumers, but without any other increase.

“Double price increase will cause minimal influx of customers. Without customers, we will be forced to reduce our employees. If this continues, the business will not survive. It’s a domino effect,” Uy said.

Since January opened, Uy observed that sales are stable and still at peak on Thursdays to Saturdays, with regulars from neighboring offices.

He said other bars are starting to raise prices not because the sin tax has taken effect, but because of the Sinulog.

Marketing

With plans of branching out to malls and expanding its operations to catering, KTV and sports lounge, TGB will bank on aggressive marketing and diversified products once the updated prices of liquor and cigarettes are out.

Currently, TGB sells cigarettes per tens and 20s at P30 to P35 and P60 to P70, respectively. Liquor per bottle costs P35 to P100, while each round of beer costs P150 to P185.

Meanwhile, Robert Go of Prince Warehouse explained that although there might be lower sales figures for cigarettes and liquor in the interim, as supply is tight due to providers not delivering stocks, prices will soon go back to cost to cost selling when the new pricing is regularized.

Go said cigarette and liquor have the highest percentage of sales in the supermarket and there are no lean months or weak seasons for these products.

Go anticipates a big jump in the pricing of cigarettes and liquor. Sales of these products typically rise in December, as local outlets anticipate a price increase each January.

In order to stay in the competition, Go said they will sell sin tax products on a cost to cost basis but they ordinarily do not stock a lot, for there is a small margin on these items.

He said they have almost zero profit from these merchandise but they still carry them because all sari-sari stores buy them.

For their convenience

While sari-sari stores are not hurt that much as they have other things to sell, the effects hit hardest those vendors whose main items are cigarettes and liquor.

Although the additional excise taxes on cigarettes and liquor imposed upon manufactures will increase the prices, the effect will just be passed on to consumers, said Bureau of Internal Revenue (BIR) 7 Director Atty. Hermeno A. Palamine.

Since cigarettes and alcoholic products are already expensive in liquor shops, the impact of the excise tax will not be substantial on these establishments, unless they implement extra raises on top of the additional taxes.

“Republic Act 10351 or the Sin Tax law is a timely tax legislation, with the Philippine economy growing,” he said.

“As estimated by BIR Commissioner Kim Henares, a projected P33.5 billion from this industry will boost the government’s budget for infrastructure projects,” Palamine added.