Consumers are bracing for a new round of price increases as three food manufacturing giants begin passing on the cost of the new sugar tax – with GraceKennedy the first to move, effective May 1.
In a customer advisory dated April 24, GraceKennedy told trade partners that the increase would apply to non-alcoholic, sweetened beverages and other products affected by higher input costs. The adjustment follows the introduction of the Special Consumption Tax (SCT) on sugar content, announced in this year’s Budget. The Government expects the measure to generate $10.1 billion in additional revenue in its first full year, part of a broader fiscal package aimed at narrowing the deficit. Notably, water – bottled or otherwise – carries no SCT, meaning consumers of non-sweetened drinks should see no price hike.
“Please be advised that an average price increase of 9.0 per cent will be implemented effective Friday May 1, 2026 on non-alcoholic, sweetened beverages coupled with increases in other products affected by cost increases,” GraceKennedy said. The company added that the tax had materially raised production costs and that it was “unable to absorb the additional costs at this time”.
The notice makes clear that the increase applies to the general trade and signals that the sugar tax is already feeding through to shelf prices, raising concerns about a broader inflationary knock-on effect as other manufacturers follow suit.
Seprod Group Chief Executive Richard Pandohie confirmed that his group would also be adjusting prices, though he indicated that the scale of increases would vary by product category. “This is a direct tax on sugar usage and, by extension, on manufacturers,” Pandohie said. “There is only so much that companies can absorb before prices have to move.”
He noted that while Seprod continues to look for efficiency gains, price adjustments are inevitable in the current environment. “Our price ranges in the region of three to eight per cent. Obviously, we’re going to continue to work with our customers and consumers because affordability is going to be an issue. Consumers are under pressure from every angle: utilities, gas, everything, and if we don’t have people buying our product, we don’t have a business,” Pandohie told the Financial Gleaner.
The developing situation has drawn sharp commentary from Wisynco Group Chairman William Mahfood, who has consistently warned that the sugar tax would filter quickly into consumer prices and stoke inflation. Mahfood had previously pushed back against the policy, cautioning that the measure could have unintended economic consequences and describing its timing as poor, given existing cost pressures on households.
“With everything else that’s going on in the world – fuel prices, significant increases in labour costs, and those that are coming – the inflationary effect of all of these, and then, of course, you have the environmental levy. I think there will be an inflationary effect. We have price increases ranging from a low of five to six per cent, going all the way up to maybe in some cases 20 or 25 per cent,” Mahfood warned, when contacted by the Financial Gleaner.
“You can’t tax a fundamental input like sugar and expect prices not to rise,” he added. “Manufacturers will have no choice but to pass on those costs, and consumers will feel it almost immediately.”
Against the backdrop of GraceKennedy’s nine per cent increase, Mahfood said Wisynco’s specific increases would be known within a week, and predicted that some categories could see price hikes well into double-digit territory once the full impact of the SCT and related cost pressures are accounted for. He also warned that the cumulative effect could complicate the Bank of Jamaica’s efforts to keep inflation within its 4.0 to 6.0 per cent target range – a task already complicated by the Iran war’s impact on fuel costs.
“This is inflationary, there’s no question about that,” Mahfood said. “At a time when households are already under strain, these increases will put further pressure on disposable incomes.”
GraceKennedy said it remains committed to maintaining quality and service despite the higher prices, but its advisory underscores a reality that industry leaders have long flagged: the sugar tax is no longer a theoretical policy debate. It is now translating directly into higher prices at the checkout, with more increases expected in the weeks ahead.
In March, Finance Minister Fayval Williams adjusted the SCT to charge a rate of $0.22 per gram of added sugar, replacing the originally announced levy of $0.02 per millilitre on beverage volume.
neville.graham@gleanerjm.com
