Health Promotions Levy – a net negative impact on South African non-alcoholic beverage industry

In the ten months since the Health Promotions Levy (HPL) was introduced, it has put pressure on the local non-alcoholic industry in already difficult operating conditions, as well as raising prices for hard-pressed consumers. The net impact of the levy has been compounded by subdued economic growth in the country and higher input costs of raw materials and ingredients, in particular, sugar. Consequently, this is limited the opportunity for growth and job creation in the sector and has resulted in downward pressure on the full value chain.

The local non-alcoholic beverage industry supports more than 290 000 jobs in South Africa and contributes more than R60 billion to the economy each year, as well as contributing R18 billion in direct, indirect and induced taxes. The HPL generated R2.26 billion from 1 April to the end of December, exceeding the forecast of R1,68 billion. The tax comes at a time when beverage manufacturers have successfully reformulated their products to reduce sugar as committed to through the Healthy Foods Options (HFO) Forum. The Forum’s mandate is to partner with the Department of Health to develop and drive healthy food options for South Africans. BevSA continues to monitor their progress against this industry target of reducing sugar by 15% and is satisfied with progress made on reformulation to date by our members.

Through industry-driven initiatives, such as introducing low and zero sugar options and investing in marketing and education around low kilojoule products, we note that consumers are becoming more aware of the different choices available to them.

We remain committed to working with government to address health concerns in an informed and impactful way. We look forward to the commencement of government’s Total Dietary Study, as committed to in parliament in 2016. This study will provide a better understanding of the impact the HPL is making overall in South Africa from a health perspective.

By Mapule Tiny Ncanywa - Executive Director of the Beverage Association of South Africa (BevSA)

Posted in Media Release, statements on Feb 28, 2019


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