Diversified group Innscor Africa Limited (Innscor) says Zimbabwe’s sugar tax regime should be widened to cover imported beverages, warning that the current policy is tilting the playing field against local manufacturers.
Through its dairy and beverage unit, Prodairy, the company said margins have come under pressure following the introduction of the sugar levy in January 2024, particularly as imported drinks, which are not subject to the tax, gain shelf space.
The result, according to the group, is a growing dominance of foreign products in the domestic market.
“Sugar tax represents a significant ‘cost-of-doing business’ for the local beverage manufacturing sector, and is borne by compliant, local beverage manufacturers,” Innscor chairman Addington Chinake said in a statement accompanying the group’s financials for the half year ended 31 December 2025.
He said the levy is “placing the products produced by these operators at a distinct price disadvantage to non-compliant beverage producers, and, in particular, imported beverage products which now dominate local shelves.”
He said the group continues to engage policymakers, expressing hope that adjustments to the framework will restore balance in the market.
“The group remains hopeful that continued engagement with the authorities will result in appropriate policy refinements that support fair competition,” Chinake said, noting that the ultimate goal is to see locally produced beverages regain prominence in retail outlets.
Authorities have previously said the sugar tax is designed to fund efforts to combat non-communicable diseases such as diabetes and cancer.
During the reporting period, Innscor paid US$3,2 million in sugar tax, bringing its cumulative contribution since the levy’s introduction to US$13,3 million.
Despite the policy headwinds, Prodairy’s beverage segment posted a seven percent increase in volumes compared to the same period last year, underpinned by strong demand for its Revive product range.
The company also indicated that further capital expenditure is underway, with new production capacity expected to come on stream early in the next financial year. The investment is aimed at improving efficiency and enabling more flexible manufacturing across product lines and packaging formats.
At group level, revenue rose 18,7 percent year-on-year to US$635,8 million. Growth was largely driven by robust performance in the Mill-Bake division, a recovery in the Protein segment, and continued momentum in selected beverage and light manufacturing categories.
Operating costs reflected ongoing expansion efforts. Depreciation and amortisation edged higher in line with recent capital projects, while net interest expenses also increased slightly due to additional borrowings to fund working capital and expansion initiatives.
“The group continues to work on reducing its overall cost of borrowing, with some reasonable progress being made in this area during the period under review,” Chinake said.
Earnings from associate companies strengthened, with equity-accounted income rising to US$4,92 million from US$2,85 million in the prior period.
Innscor reported profit before tax of US$71,78 million for the half-year period. – TML