Sugar Tax Squeezes Delta Profits, Raises Beverage ...

Sugar Tax Squeezes Delta Profits, Raises Beverage Prices

Philemon Jambaya

ASSISTANT EDITOR

Delta Corporation Limited, Zimbabwe’s largest beverage maker, is feeling the pinch from the newly-implemented sugar tax. The tax, introduced in 2024, is expected to significantly impact the company’s finances and has already led to price increases for consumers.

The tax, initially proposed at US$0.02 per gram of sugar, was reduced to US$0.001 following industry pushback. Despite the revision, Delta’s group finance director, Alex Makamure, highlighted a substantial increase in their tax burden. The company expects to pay US$46 million in sugar tax alone, compared to their usual US$20-25 million total corporate tax bill.

This surge in taxation has forced Delta to raise prices. The cost of a 2-litre bottle of Schweppes’ Mazoe Orange Crush jumped 36%, while a 330ml Coca-cola bottle saw a 32% price hike. Makamure expressed concern that these increases might coincide with a seasonal sales slump during winter.

Delta is exploring ways to mitigate the tax’s impact. They are considering packaging adjustments to offer products at more affordable price points without compromising quality. The company is committed to balancing tax obligations with consumer needs.

Delta’s CEO, Matlhogonolo Valela, reiterated that the sugar tax represents an additional financial burden. He questioned whether consumers can absorb these price increases without a reduction in consumption. Valela emphasised Delta’s efforts to maintain affordability while fulfilling its tax obligations.