The South African Government is Considering Imposing a Sugar Tax on Pure Fruit Juices

The South African government is considering placing the Health Promotion Levy (Sugar Tax) on 100% fruit juice. The levy was introduced in 2018 on sugary drinks such as soft drinks and fruit juice with added sugar and excluded 100% pure fruit juice. However, SA's National Treasury has recently claimed that high sugar levels are present in 100% pure fruit juice making it harmful to consumers' health. The government's rationale is that the recommended natural sugar is contained in fruit form and not in juice form, as fruit juice contains high levels of sugar per serving, similar to that of sugar-sweetened beverages. This move has triggered a lot of debate as no other country has reached such a conclusion or implemented a similar tax on pure fruit juice. Industry reaction to this has been mixed, with certain bodies such as the Association of Dietetics supporting the decision, while fruit juice processors in the country are concerned that the levy could have a devastating impact on the industry.

If the levy is applied, fruit juice processors will have to conduct further processing of their pure fruit juice to reduce the sugar levels. This will add to the overall cost of processing and the final product price. According to the Consumer Goods Council of South Africa (CGCSA), the situation could also result in job losses within the sector as the sustainability of many industry players could be called to question.

Elton Greeve, a Tridge Engagement Manager based in South Africa, believes the Health Promotion Levy will have a significant impact on the industry, pushing prices up and reducing the country's competitiveness in the export market.

Elton further added, "If we take lessons from the sugar industry, the taxes had a very negative effect, leaving the industry battling. The main question that arises is how does the industry reduce the natural sugars, what cost does that add, and how much will that carry over to the client? From an export perspective, the tax will be devastating, and we'll lose market share."

As the government continues to mull over placing 100% pure fruit juice under the umbrella of the Health Promotion Levy, industry players remain averse, strategizing on how to deal with the outcome. Also, consultations have already been initiated to discuss the challenges of the tax and lowering the 4g threshold as industry bodies prepare to limit the impact of the levy. Further directives from the government are expected on Apr-22.