Schweppes Unlikely To Cut Prices Despite Sugar Tax Reduction

HARARE – Schweppes Holdings Africa has stated that prices of its sugary beverages are unlikely to decrease despite the recent reduction in sugar tax, citing ongoing cost pressures, including rising fruit and sugar prices.

According to The Herald, Finance, Economic Development and Investment Promotion Minister, Professor Mthuli Ncube, reduced the special surtax on the sugar content of cordials from US$0,001 to US$0,0005 per gramme in the 2025 National Budget, a measure that took effect on January 1.

Despite this adjustment, Schweppes has indicated that production costs remain high, limiting any potential reduction in retail prices. Delta Corporation, a major shareholder in the company, revealed in its latest trading update that the sugar tax had contributed to a 27 percent decline in Schweppes’ sales volume for the third quarter ending December 31, 2024, and a 17 percent drop over the nine-month period.

“The reduction in the sugar tax from January 2025 is a welcome development, although there are significant cost pressures such as the rising juicing fruit and sugar prices, which limit the opportunity to moderate retail prices,” said Delta Corporation company secretary Ms Faith Musinga.

Delta also reported a 10 to 33 percent price increase across various beverage categories, which slowed demand. The introduction of the sugar tax last year had made local products more expensive, prompting an influx of cheaper imported alternatives, particularly informal imports of Schweppes’ flagship Mazoe Orange Crush from regional markets such as Zambia.

Initially, the Government had imposed a sugar surtax of US$0,02 per gramme on both ready-to-drink and cordial beverages before lowering it to US$0,001 following industry concerns. Despite this adjustment, Delta disclosed that the sugar tax collected from February to December 2024 amounted to US$31,2 million, covering both sparkling beverages and cordials.

The sugar tax is part of Government efforts to discourage the consumption of sugary drinks due to their links to health issues such as obesity, type 2 diabetes, and heart disease. Revenue generated from the levy is earmarked for the healthcare sector, including cancer treatment and medical equipment procurement.

While businesses in the beverage industry acknowledge the tax relief, they remain constrained by broader economic challenges, making price reductions unlikely in the near future.

#Schweppes #Cut #Prices #Sugar #Tax #Reduction #Zimbabwe #Mail