As the government pushes public health goals, the beverage giant is caught between uncompetitive pricing, illicit imports, and a fight for the survival of the formal soft drinks sector.
By Jonathan Mbiriyamveka
HARARE – In a bold and costly strategy, Delta Corporation has chosen to absorb millions of dollars in sugar tax to keep its soft drinks affordable, revealing a high-stakes battle where public health policy is colliding with business survival in Zimbabwe’s struggling formal economy.
For the six months ended 30 September 2025, Delta Beverages and its newly consolidated subsidiary, Schweppes Zimbabwe, paid a combined US$15 million in sugar content surtax.
In a startling disclosure, the company revealed that “more than half” of this amount—over US$7.5 million—was absorbed by the company itself rather than being passed on to the consumer.
This strategic move resulted in “depressed earnings” for its Sparkling Beverages unit, which managed only a modest 11% volume growth despite a booming consumer market.
“The performance of the soft drinks sector remains subdued due to high sugar content surtax which has impacted price competitiveness,” the company’s board stated bluntly in its half-year report.
This self-funded price suppression is a desperate attempt to stem the tide of consumers switching to “cheaper imports and emerging product offerings with unregulated artificial sweeteners.”
The situation creates a vicious cycle for local manufacturers. The high tax makes locally produced soft drinks expensive. To stay competitive, Delta swallows the cost, which crushes its profitability in that segment.
Meanwhile, the formal retail sector, which is their primary channel, is itself under pressure, while the informal sector and illicit trade flourish, often selling products that do not comply with the same tax and regulatory standards.
“This is an untenable situation versus earnings generated in this category,” Delta warned, highlighting that the US$15 million tax bill was only slightly below the US$16.5 million paid in the prior period.
The company is now actively engaging the government, arguing for a recalibration of the tax to “regional benchmarks” to create a fair playing field.
“The sugar tax is achieving its public health goal of reducing consumption, but the unintended consequence is the decimation of the legitimate local industry,” said an industry insider who requested anonymity due to the sensitivity of ongoing government talks.
“Delta is essentially subsidizing the consumer to maintain market share, but that is not a sustainable long-term business model. They are choosing a slow bleed over a rapid exodus of customers.”
The predicament underscores a wider policy challenge in Zimbabwe: how to balance fiscal and health objectives with the need to protect domestic industries and jobs. For Delta, the solution is clear.
Without a tax review, the very category it is investing in—from its Sparkling Beverages to the newly acquired Schweppes cordials and juices—faces an uncertain future, not from a lack of demand, but from a policy environment that makes it impossible to compete.
About Author
