Industry Analysis of Bottled Water and Carbonated Soft Drinks in Oman: Market Structure, Excise Tax Incidence, and Price Elasticity

This paper analyses the bottled water and carbonated soft drinks (CSD) markets in Oman using five microeconomic tools: market structure classification, Herfindahl-Hirschman Index (HHI) concentration analysis, supply and demand shift analysis, arc elasticity estimation, and welfare analysis. The bottled water market is classified as monopolistic competition, while the CSD market operates as a highly concentrated duopoly dominated by Oman Refreshment Company SAOG and Dhofar Beverage and Foodstuff Company SAOG, with an HHI approaching 10,000. Oman’s selective excise tax, introduced in June 2019 at 50% on CSDs while exempting natural still water, generated an upward supply shift for CSD producers. Two distinct elasticity estimates are reported: a tax-only arc elasticity of approximately −0.23 (2018–2019) and a compound-shock elasticity of approximately −0.92 (9M-2023 versus 9M-2024), reflecting the combined effects of the tax, health-consciousness trends, and the October 2023 regional boycott of Western franchise brands. Tax incidence analysis indicates consumers bear approximately 63% of the excise burden. Three policy recommendations are proposed: a tiered excise tax structure differentiated by sugar content, a domestic beverage brand development programme, and mandatory quarterly price transparency reporting for CSD producers.