ZIMBABWE’S beverage and sugar producers say the country’s sugar tax continues to weigh heavily on earnings, demand and value chain sustainability, despite the earlier reduction announced by the Treasury to lessen its impact.
Stakeholders in the industry continue to engage Government in search of relief measures.
The sugar tax on beverages is intended to mobilise resources to combat rising non-communicable diseases (NCDs) such as cancer, diabetes and obesity, which health experts link to high sugar consumption.
The Treasury reported last year that it had raised more than US$25 million between early 2024 and mid 2025 through the sugar tax for the procurement of cancer treatment equipment, including linear accelerators and CT simulators.
Introduced in February 2024, the levy is charged at US$0,001 per gramme of added sugar on specified beverages and applies uniformly to both ready to drink and concentrated products.
Although Government reduced the surtax on cordials from US$0,001 per gramme to US$0,0005 per gramme with effect from January 1, 2025, industry players maintain that the levy on the wider beverage category remains high.
Delta Corporation, the country’s largest beverages manufacturer, said that while its operations delivered strong volume growth and improved trading margins for the half year to September 30, 2025, these gains were diluted by the sugar tax.
“Group revenue for the half year at US$514 million increased by 32 percent compared to the prior year, reflecting the volume growth across the Zimbabwe business units and the inclusion of Schweppes as a subsidiary.
“The revenue growth was weighed down by the price moderations in the sparkling beverages business, which partly absorbed the sugar tax to maintain volume and competitiveness,” the company said in its financials.
Schweppes Zimbabwe Limited
Delta said trading margins benefitted from lower cereal and packaging material costs, favourable currency movements and higher throughput.
“However, the benefits were eroded by the under recovery on the sugar tax,” the company said.
During the period, Delta and its subsidiary Schweppes Zimbabwe paid the equivalent of US$15 million in sugar tax, compared to US$16,5 million in the prior corresponding period — an untenable situation, the company noted, given the earnings generated in that category.
“Engagements with the Government are continuing to avoid the inevitable damage to the category going forward,” Delta said.
Finance director Mr Alex Makamure has previously said that while any reduction in the sugar tax is welcome, the levy remains high compared to other markets where similar measures exist.
“Our recommendation is that the first four grammes per 100 millilitres should be exempted. We are seeing massive quantities of imported brands into the country,” he said.
Sugar refining and processing firms are also reporting weakening demand as industrial customers adjust consumption to manage cost pressures.
Starafricacorporation chairman Dr Rungano Mbire said the lack of progress on resolving sugar tax and Value Added Tax classification issues continued to negatively affect group margins.
“Nonetheless, the lack of progress in addressing key value chain issues on the Sugar Tax and VAT classification continues to negatively impact margins,” he said in the group’s half year results to September 30, 2025.
He said the company would continue engaging Government through the Zimbabwe Sugar Association, noting that policy alignment is critical to the Zimbabwe Sugarcane Industry Development Strategy, which aims to double output over the next decade.
At subsidiary Goldstar Sugars (GSS), sales volumes declined sharply as industrial demand softened. Sugar refining volumes fell 26 percent to 27 208 tonnes from 36 625 tonnes in the prior year, while production dropped to 28 686 tonnes from 36 818 tonnes, with output remaining demand driven.
Starafricacorporation said business to business demand weakened largely because key customers reduced sugar usage by substituting non-nutritive sweeteners to mitigate the impact of the tax.
As a result, consolidated group turnover fell 25 percent to US$27,3 million from US$36,2 million, driven mainly by the downturn at Goldstar Sugars.
Market analysts say Delta’s performance highlights both the resilience of major consumer goods manufacturers and the mounting policy risks facing the sector.
In its review of Delta’s half year performance, FBC Securities said the company’s ability to sustain growth demonstrated operational agility and strong market positioning despite a challenging external environment.
“Delta’s effective management of its beverage segments, coupled with its willingness to absorb certain regulatory costs such as the sugar tax, reflects a focus on maintaining market share,” FBC Securities said.
However, the firm cautioned that regulatory pressures, rising utility costs and credit constraints continued to compress margins, posing risks to long term sustainability if unresolved.
FBC Securities also highlighted Delta’s wider economic significance, noting that the company is a major contributor to employment, tax revenues, infrastructure investment and stability in the consumer goods supply chain.
“Any disruption in Delta’s operations could have considerable effects on the economy, underscoring the importance of a favourable business environment for the company,” the firm said.
Meanwhile, Government recently announced that the first consignment of cancer treatment machines procured using the US$30 million raised through the sugar tax in 2024 is now in Durban, South Africa, en route to Zimbabwe, with delivery expected in the first quarter of the year.
According to the Ministry of Finance, Economic Development and Investment Promotion’s 2026 Zimbabwe Infrastructure Investment Programme, released in November last year, Treasury has so far paid US$5,3 million towards the equipment.
Once delivered, the machines will be installed at Parirenyatwa Group of Hospitals in Harare and Mpilo Central Hospital in Bulawayo. – Herald
