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SUGAR HIT:Tax affecting fizzy drink market

Business

Has sugar tax led to sweet success?

It is almost a year since government enforced a sugar tax on sweetened beverages in an effort to combat growing levels of obesity and diabetes in the country.

Introduced last April, the levy was set at a rate of P0.02 for every gram of sugar over 4 grams per 100 millilitres. To put this into context, a 330ml bottle of coke, the world’s top selling fizzy drink, on average contains around 10.6 grams of sugar for every 100ml. This would put the sugar tax on a can at around 45 thebe. For a two-litre bottle, however, that sugary hit would sit at P2.64.

When announcing the tax during the budget speech last year, the then Minister of Finance and Economic Development, Dr. Thapelo Matsheka noted Botswana is in the midst of a health crisis, with many locals consuming too much sugar, leading to problems with obesity and diabetes.

“In order to address this health challenge and at the same time raise revenues, Government will introduce a levy on sweetened beverages related to their sugar content,” stated Matsheka at the time.

The former Finance Minister, who was moved on from his post on 17 April 2021, said the tax would in turn prompt a slight rise in the prices of high-content sugar drinks. It was envisioned this would provide enough of an incentive for consumers to switch to liquid with lower sugar content, and for manufacturers to follow suit.

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10 months later, retailers and manufactures say they have indeed observed a slight drop in sales.

“The prices have increased and it’s affecting the volumes. Also, there are some issues, like where 100 percent juices are also attracting sugar tax,” said Choppies Chief Executive Officer (CEO), Ramachandran Ottapathu, who described the drop in sales as moderate.

Meanwhile, the country’s largest producer of sugary drinks, Coca-Cola Beverages Botswana (CCBB), said it had to be innovative to deal with the tax.

“Our current portfolio includes a wide range, including low to non-sugar options while keeping the same great taste people love. Similarly, we have a range of packaging options from which consumers can make a choice,” said David Chait, CCBB Managing Director.

“The implications notwithstanding, we continue to offer our consumers choice through our extensive beverage portfolio as we continue to hope for reconsideration of some of the provisions of the sugar tax,” continued Chait.

A report by the World Health Organisation (WHO) says taxes on sugary drinks help reduce consumption and prevent obesity. The report says evidence shows that a tax on sugary drinks that increases prices by 20 percent can lead to a reduction in consumption of around 20 percent.

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WHO cites over-consumption of sugar as a major contributor to obesity, diabetes and tooth decay.

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