The packaged juice industry in Pakistan, once projected to surpass Rs72 billion in annual sales, is now a shadow of its former self. Crippled by a cumulative tax burden of 42%, a 20% federal excise duty stacked on top of an 18% general sales tax, this sector has seen a sharp 45% decline in revenue, now barely reaching Rs42 billion. Far from being just a beverage issue, the contraction has had broad economic consequences: factories are scaling back, jobs are lost, and investment has ground to a halt. For over two years, no new project has been initiated in this space, a sector that once linked rural produce to urban markets and supported formal economic growth.
As these legitimate players gasp for air, the informal sector is thriving. Cheap, unregulated drinks, many containing little to no real fruit, are rapidly filling the market gap, sold without oversight or taxation. Consumers, squeezed by inflation, are opting for what’s affordable, not necessarily what’s safe. This shift has led to a net loss for the government, as revenue from the formal sector shrinks while the underground market booms, completely bypassing tax systems and food safety standards.
The damage doesn’t end there. Behind every juice box lies an intricate rural supply chain—farmers who rely on processors to buy surplus fruit during harvest season. With production scaled back or suspended for over 100 days a year by some manufacturers, fruit procurement has dropped dramatically. Mango purchases, for instance, have fallen from 31,000 tons in 2017-18 to just 20,233 tons last year. That shortfall means more fruit rotting in fields, more lost income for farmers, and greater pressure on a rural economy already struggling with poor infrastructure and market access. These processors didn’t just buy fruit; they trained farmers, improved post-harvest handling, and helped stabilize seasonal price crashes. Now, that safety net is dissolving.
What’s more, this policy approach undermines public health objectives. When real fruit juice becomes a luxury item, consumers turn to cheaper alternatives that offer none of the nutritional value juice once provided. In a country facing rising rates of malnutrition and non-communicable diseases, this is not just a market failure, it’s a health risk.
Despite the mounting evidence, the industry isn’t calling for sweeping tax reforms. Instead, it’s asking for a modest 5% reduction in the federal excise duty—a move they argue would give companies space to breathe, stimulate production, and ultimately bring more revenue back into government coffers. Without it, they warn, the slide will continue, further bleeding an economy that can ill afford to lose productive industries. At the very least, stakeholders suggest forming a joint task force of public and private representatives to curb the informal sector’s unchecked rise and restore fairness to the market.
Today it’s juice, tomorrow it’s another industry — when taxation stifles the formal sector, the shadows swell, farmers are left stranded, and the economy takes the fall.
Budget 2025-26: Which Food items will become expensive amid New Taxes?
