Pakistan’s packaged juice industry is facing significant challenges as rising taxation has driven up prices and led to a sharp decline in consumer demand across the country.
The sector is currently burdened by a combined tax structure of 20% Federal Excise Duty (FED) and 18% General Sales Tax (GST), resulting in an overall tax load of approximately 42%, which industry stakeholders say is severely impacting affordability.
Sales Drop by Over 45% After Tax Increase
According to industry representatives, the increase in taxes has directly affected market performance. Higher retail prices have led to a major drop in consumption, with sales declining by more than 45% since the revised tax regime was introduced.
This sharp fall reflects reduced purchasing power among consumers and a shift in buying behavior toward cheaper alternatives.
Market Value Shrinks from PKR 60 Billion to PKR 40 Billion
Industry data indicates that the overall market size has contracted significantly, falling from nearly PKR 60 billion to around PKR 40 billion.
Experts say this decline highlights the combined impact of:
- Increased retail prices
- Reduced consumer affordability
- Shift in demand patterns
The industry is now under pressure to maintain production and profitability in a shrinking market environment.
Growth of Informal and Unregulated Juice Market
Stakeholders warn that high prices are pushing consumers toward unregulated and informal juice alternatives.
This shift raises concerns about:
- Product quality and safety standards
- Lack of regulatory oversight
- Long-term sustainability of branded juice manufacturers
Industry experts believe this trend could weaken the formal beverage sector if not addressed through policy changes.
Proposed Tax Reforms for Budget 2026–27
To revive the industry, stakeholders have proposed reforms in the upcoming Budget 2026–27, including:
- Reduction of Federal Excise Duty from 20% to 10%
- Introduction of a zero-tax category for juices without added sucrose or white sugar
These measures aim to improve affordability and encourage healthier product consumption.
Expected Economic Impact of Tax Reduction
Industry officials argue that reducing taxes could:
- Restore consumer demand
- Increase sales volumes
- Reduce reliance on informal markets
- Improve long-term tax revenue through higher consumption
They also believe that a more balanced tax policy would help stabilize the industry and support healthier product innovation.
