Star Africa Rallies Against Sugar Tax Impact, Push...

Star Africa Rallies Against Sugar Tax Impact, Pushes for Policy Reform

Audrey Galawu- Assistant Editor

Star Africa Corporation Limited has reported resilient performance for the year ended 31 March 2025, despite economic pressures and regulatory challenges, most notably the impact of the government-imposed “sugar tax.”

While the Group delivered strong top-line growth and operational improvements, the sugar tax emerged as a significant headwind, particularly in the second half of the financial year, altering demand patterns and disrupting local industrial supply chains.

Introduced as part of health policy reforms, the sugar tax — formally known as the Added Sugar on Beverages Tax — has negatively affected the consumption of industrial sugar, reducing orders from beverage and food manufacturers and altering pricing dynamics across the market.

“The second half of the financial year presented a more challenging environment, characterised by subdued consumer demand linked to tight liquidity and reduced disposable incomes,” the Group said in its financial statement.

“This was compounded by policy changes such as the sugar tax, which disrupted demand in industrial segments.”

Despite these pressures, the Group posted a 22% increase in revenue to ZWG$1.71 billion, up from ZWG$1.41 billion the previous year. The improvement was driven largely by increased volumes at both Goldstar Sugars and Country Choice Foods, reflecting Star Africa’s ability to remain agile in a shifting policy and economic environment.

Goldstar Sugars, the Group’s primary sugar refinery, was directly impacted by the sugar tax. Industrial demand for white sugar weakened as manufacturers scaled down production or turned to lower-cost imported substitutes.

Nevertheless, GSS posted a 7% increase in sugar sales volumes, delivering 59,613 tonnes over the reporting period, supported by a steady supply of raw sugar and disciplined production management.

“While the ‘sugar tax’ remains a headwind, we will continue to advocate, through the Zimbabwe Sugar Association, for policy refinements that support the local industry,” said Chairman Dr. R. J. Mbire. “We are also hopeful that the recent inclusion of white sugar on the list of products attracting a 30% surtax will provide necessary protection against the dumping of sugar by regional producers.”

The implementation of the surtax offers some relief by discouraging imports, which had begun undercutting locally refined products. Star Africa sees this development as a step toward levelling the playing field and enabling domestic manufacturers to regain competitive ground.

Operating profit improved markedly, with the Group narrowing its operating loss to ZWG$79.8 million, a significant recovery from ZWG 501.5 million in the previous year. Gross profit reached ZWG$339.7 million, despite the Group’s decision to keep prices competitive in the face of cheap imports and suppressed demand.

Country Choice Foods recorded a 14% increase in sales volumes, delivering 1,416 tonnes. The unit’s performance was bolstered by a focused market strategy and the introduction of value-added products that align with evolving consumer tastes.

The Group’s associate company, Tongaat Hulett Botswana, contributed ZWG$9.0 million to profit, while rental income rose from ZWG$7.6 million to ZWG$9.5 million, thanks to upward lease adjustments across its property portfolio.

Star Africa’s balance sheet remained stable, with total assets at ZWG$849 million (inflation-adjusted) and ZWG$766 million (historical). Equity attributable to shareholders stood at ZWG$398 million and ZWG$328 million under respective accounting methods.

The Board opted not to declare a dividend for the year, prioritising reinvestment and working capital stability.

“Star Africa remains resolutely focused on enhancing our value proposition to customers,” said Dr. Mbire. “Through continuous innovation and a commitment to operational excellence, we are confident in our ability to drive long-term sustainable growth.”

Looking ahead to 2026, the Group is placing greater emphasis on innovation, competitiveness, and industry advocacy to ensure that government policies strike a balance between public health goals and industrial sustainability.

“Our goal is to expand our market reach, offer competitive pricing, and increase local consumption of our premium white sugar and specialty products,” the Board noted.