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Delta Corporation Limited has paid US$20 million in sugar tax since the tax’s introduction in February 2024.
The tax, which came into effect at the start of 2024, charges beverage firms US$0.02 per gram of sugar in their products. In response to industry complaints, the tax was revised in March to US$0.001 per gram.
Delta executives have stated that the sugar tax has made the company less competitive within the region, particularly when comparing it to tax rates in neighbouring countries.
The full impact of the sugar tax on Delta’s financial performance will be felt in the financial year ending March 31, 2025, alongside other existing taxes.
At an analyst briefing on Wednesday, Delta’s CEO, Matlhogonolo Valela, told <a href="https://www.newsday.co.zw/business/article/200034671/delta-pays-us20m-sugar-tax-in-9-months">NewsDay</a> that the sugar tax in Zimbabwe is considerably higher than that in other regional markets. Said Valela:
<blockquote>
Well, since February, between ourselves and Schweppes, we have paid about US$20 million in sugar tax.
Obviously, the rates of sugar tax, we think, are very high compared to regional compatriots. Therefore, it brings a competitiveness issue.
That’s why you are seeing regional inflows of similar competing products into our territory. It is on the basis that we are slightly more expensive than what people can source from alternative markets around us.
</blockquote>
Delta has a 49% stake in Schweppes Holdings Africa Limited.
Valela said Delta is in talks with the government regarding the sugar tax, but any potential outcomes from these discussions are expected to be reflected in the 2025 National Budget.
Delta’s finance director, Alex Makamure, said the introduction of the sugar tax led the company to raise soft drink prices by 33%, which has hurt consumers. Said Makamure:
<blockquote>
So, it is a big tax from the rate at which it was imposed. So even at that US$0,001 per gramme, it is very high relative to other countries.
So, all our pleas to the government have always been, yes, it’s noble to introduce a sugar tax, but maybe look at the level…
Remember for us, your 300ml Coke was selling at US$0,25 or US$1 for four. We had to move to US$1 for three, which is a 33% increase. Quite huge from a consumer’s point of view.
Schweppes, for example, they were selling your 2-litre Mazowe at, I think it was, US$3,20 or U$3. They went to US$4.50.
They have sort of discounted, and now they are carrying some of the burden themselves. But it is very significant, particularly for your dilutable.
</blockquote>
Makamure said that Delta has no issue with the introduction of the sugar tax, but argued that it should be set at a level that minimises its impact on consumers while still encouraging a reduction in sugar consumption.
More: <a href="https://www.pindula.co.zw/">Pindula News</a>

Pindula News

Delta Corporation Limited has paid $20 million in sugar tax since February 2024. The tax charges beverage companies for the amount of sugar in their products. Delta says the tax makes them less competitive compared to other countries. They have raised prices, hurting consumers. Delta is talking to the government about the tax. They want it to be lower to help consumers. The impact of the tax will be seen in the company's finances in 2025. Delta owns 49% of Schweppes, which is also affected by the tax.

Delta Pays US$20 Million Sugar Tax In 9 Months

Beverages manufacturer Schweppes Zimbabwe is operating below optimum capacity due to a severe shortage of fruits. The company processes citrus fruits into juices and raw fruits into pastes and purees. The company was targeting 20 000 tonnes of raw fruit this year. However, last year the company received only 2 400 tonnes of raw fruit out of the targeted 12 000  tonnes.  That was less than 25 percent of the expected amount.
Smart Zongololo, the general manager of Best Fruit Processors, a unit of Schweppes said:
<blockquote>The problem is that we are not getting enough raw materials in the form of raw fruits from the local market. We are not getting enough to run our factories. We want to process about 20 000 tonnes of raw fruit this year but we are not expecting to get enough because local farmers are not growing enough. Last year, we got about 2 400 tonnes of raw fruit from a target of 12 000 tonnes.
Apart from that, we realised that the cost of inputs such as fertilisers are also a problem. We want to make sure that the costs are effective. We want to sit down with them (farmers), mobilise them and second agronomists to assist them.</blockquote>
More: <a href="http://www.financialgazette.co.zw/schweppes-faces-fruits-shortage/">Financial Gazette</a>

Schweppes Zimbabwe facing severe shortage of fruits, received less than 25% last year

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