Coca-cola Beverages Africa is likely to be most affected by the proposed sugar tax as it leads the soft drinks market in South Africa and, unlike other soft drinks manufacturers, it doesn't have a diversified income stream. From April 1 next year, a tax will be implemented on sugar-sweetened beverages. The National Treasury has proposed that the tax be levied on fizzy drinks, sweetened fruit drinks, and sport and energy drinks. Vitamin water, iced tea and lemonade have also been included, but 100% fruit juices and milk products have dodged the bullet.The rate of tax will be at 2.29c for every gram of sugar, which is one of the highest in the world.CCBA - formed from the merger of SABMiller, the Coca-Cola Company and Gutsche Family Investments - makes Fanta, Sparletta, Sprite, Powerade, Minute Maid and the Appletiser range, among other brands.story_article_left1The tax on a 330ml can of Fanta Grape, which contains 44.1g (about nine teaspoons) of sugar, will be just over R1. On a can of Coke, which contains 36.3g of sugar in a 330ml can, the tax will be about 83c.Other CCBA brands that are heavy on sugar include Appletiser, with 31.7g, or about six teaspoons, of sugar in a 330ml bottle, and Powerade, which has 38.8g of sugar in a 500ml bottle.JSE-listed Tiger Brands has exposure to the tax as the manufacturer of Energade, Hall's Fruit Juice and Rose's Lime Juice. These brands are held under its beverage operations.While not the biggest driver of revenue for the company, the beverage operations contribute a significant amount to total turnover. In the six months to end-March, beverages achieved top-line growth of 17% to R758-million, underpinned by volume growth in its Oros, Energade and Rose's brands.Bowler Metcalf is also affected through its SoftBev division, which includes brands such as Pepsi, Jive, Capri Sun and Coo-ee. However, SoftBev's contribution to total group revenue remains relatively small at R14 -million in the six months to end-December. Bowler Metcalf's total revenue for that period was R254.8-million.It is not only manufacturers that stand to lose. Sugar producers may also feel the impact.Absa AgriBusiness economist Ernst Janovsky said control mechanisms in the industry might allow producers to control prices, but the tax would inevitably affect the sugar industry."[The tax] might drive the consumption of sugar lower in South Africa."Reduced consumption of sugar could lead to job losses in the already embattled sector. The industry generates an estimated R12-billion annually.About 79,000 people are directly employed in the sugar industry. This is more than 11% of the total agricultural workforce. The South African Sugar Association estimates that indirect employment provides 350,000 jobs.In its proposal document, the government said the sugar tax was a health measure to reduce excessive sugar intake. Less sugar would reduce the high levels of obesity and diabetes in the country, it said.Coca-Cola and Tiger Brands referred queries on the sugar tax to the Beverage Association of South Africa. The executive director of BevSA, Mapule Ncanywa, said the tax would not address the underlying issues causing the health problems.block_quotes_start We have seen in other countries where the tax has been introduced that consumers have acted in unexpected ways. Some consumers resorted to buying large quantities before the tax was introduced block_quotes_end"Calories consumed from soft drinks alone represent a small percentage versus the total consumer's food basket. We believe that a public-private partnership between industry and government, to provide consumers with the information and education needed to balance their calories, is the correct way to go," she said.BevSA represents all nonalcoholic beverage manufacturers including Tiger Brands, Pioneer Foods and inhouse branded retailers - excluding fruit juice makers.Ncanywa said a more effective tax would be one that extended to all categories of food with added sugar."The tax will hurt incomes, cost jobs and threaten small-business people who depend on beverage sales for a big part of their livelihoods, as do their employees," she said.The government has stated that there are no plans to apply the sugar tax to other goods. It has, however, introduced amendments to the Foodstuffs, Cosmetics and Disinfectants Act aimed at reducing the amount of salt in food to battle lifestyle-related diseases.Foods affected include bread, butter, breakfast cereals, potato crisps, processed meats, soup and gravy powder, instant noodles and jelly.story_article_right2South Africa is following in the footsteps of countries such as Mexico, Mauritius and Hungary in implementing a sugar tax.KPMG senior economist Lullu Krugel said there would be some unintended consequences arising from such a tax."We have seen in other countries where the tax has been introduced that consumers have acted in unexpected ways. Some consumers resorted to buying large quantities before the tax was introduced."Other consumers began to engage in cross-border shopping. In some instances, such as in Mexico, some job losses were reported."Krugel said the burden of the tax would be felt most in lower-income households, which statistically spent a higher portion of their money on food.South Africa had a tax on soft drinks and mineral water until 2002. At that time the tax was imposed primarily to generate revenue; it was phased out after lobbying by the industry.Companies can choose to absorb the costs associated with the tax or pass them on to consumers. This would be difficult to do in the battle for market share in a subdued consumer environment.Alternatively, they will be forced to reduce the amount of sugar in their products, but research indicates that sweeter beverages are more popular.gokoc@bdfm.co.za..