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Sikhulekelani Moyo, [email protected]

SCHWEPPES Zimbabwe Limited has increased the prices of its products, citing the introduction of the Sugar Tax, which has seen the popular Mazoe Orange Crush rising from about US$3,50 to between US$4,50 and US$5,10 a 2-litre bottle.

On its website, Schweppes indicated that a six-pack of Mazoe Orange Crush is now going for US$25 which is about US$4,16 wholesale price per 2liter bottle.

This has left the market shocked with social media flooded with pictures of the product in different retail outlets.

The levy is also applicable to other Schweppes products, which include Mazoe syrups and Minute Maid brand and the prices have been increased also.

The move by Schweppes is a response to the introduction of a levy on sugar content in beverages, which was proposed through the 2024 National Budget.

In his 2024 National Budget statement, Minister of Finance, Economic Development and Investment Promotion Professor Mthuli Ncube said in response to the growing concerns about the adverse effects of consumption of sugar, in particular, contained in beverages, a tax on beverages has been implemented in several countries, including in the SADC region.

He said the consumption of high sugar-content beverages is linked to increased risk of non-communicable diseases and he said it is, thus, necessary to discourage the consumption of high sugar-content beverages, hence, he proposed to introduce a levy of US$0,02 per gram of sugar contained in beverages, excluding water, with effect from 1 January 2024.

The funds derived from this levy will be ring-fenced for therapy and procurement of cancer equipment for diagnosis.

Responding to questions sent to her, Schweppes head of corporate affairs Ms Ropafadzo Gwanetsa said the sugar tax introduced via Statutory Instrument 16 of 2024 has had a significant impact on the price of Mazoe.

She said the impact is different on cordials or dilutable compared to ready-to-drink beverages which contain low sugar content.

“Cordials or dilutables have higher sugar content because they are concentrated and tax on sugar in beverages should have been based on sugar per mil litre of diluted or finished product. That is the norm globally, said Ms Gwanetsa.

“In the published tax regulations, tax is on grams of sugar in a cordial product, hence higher tax and price increase on cordials/concentrate products compared to ready-to-drink beverages

“Generally, and under normal circumstances, cordials or concentrated juice drinks would have lower tax rates than ready-to-drink beverages.”

She said they have been engaging relevant authorities on the issue and they will continue to do so saying that this tax will harm demand and business performance as it comes at a time when consumers are faced with affordability challenges.

Schweppes said unlike value-added tax (VAT), sugar tax is a cost to the business whose funding carries the cost of money.

Ms Gwanetsa added that in the beverage industry, supplying to formal retailers and wholesalers comes with longer payment terms, which strains working capital as the tax has to be paid before customers have paid.

“⁠Industry competitiveness and viability is at risk as regional tax levels are far much lower and therefore there is an inherent threat of cheap imports into the country

“Our plea is for the Government is to review downwards the sugar tax on cordials/dilutable and concentrated juice drinks to be in line with regional and international levels,” she said

“The beverage industry is also imploring the authorities to clarify the effective date of the tax regulations. Additionally, it is paramount that authorities advise the industry of what happens between 1 Jan 2024 and the effective date of SI 16 of 2024.”

  @SikhulekelaniM1