HARARE - Zimbabwe Stock Exchange-listed wines maker, African Distillers (Afdis) says the price of ciders produced under licence will be reduced by between 22 and 25 percent due to cost effective production from its $5 million new packaging plant.
Cecil Gombera, Afdis’ managing director, said the company needed to invest in new technology in order to be more competitive and start producing Hunters’ and Savanna ciders locally.
“We will continue to bring down the (production) costs and therefore pass on the affordable price to the consumer. There shouldn’t be any fear about the quality of this product. This is a first world investment,” said Gombera at the official commissioning of the plant on Wednesday.
The recommended retail price of Hunters has gone down to $1,25 from $1,60 while Savanna is now priced at $1,35 from $1,66 although most liquor outlets round off the prices to $2.
This comes as last month listed beverages maker Delta Corporation (Delta)’s retail price of beer marginally went down from between five cents and 20 cents across the whole portfolio stating that affordability had become a big issue for the Zimbabwean consumers.
Industry minister Mike Bimha noted that notwithstanding that the country is currently submerged in a sea of doom and gloom, the beverages sub-sector was one of the few sectors helping to rescue the economy from submersion.
“Your sector has thus, continuously sought to improve its production efficiencies to enable you to fight and withstand the cut throat global competition,” he said.
Afdis’ investment has resulted in the business’ installed annual production capacity improving from 34 million litres to 54 million litres with the new line producing 4200 litres per hour from the previous 1300 litres produced on the old lines.
The listed spirits-maker is also mulling plans to venture into regional market exports.
“As the business focuses on expansion, this investment will bring with it competitive advantages as we venture into regional exports,” said Afdis’ chairman Joe Mtizwa.
He noted that the plant had created new jobs and saved the Zimbabwe from over reliance on imported products.
Imports continue to choke local industry and the country’s import bill is projected to increase by more than $500 million to $8,3 billion by year-end on the back of a widening competitiveness gap.
According to EFE Securities, since retooling Afdis has been able to shift from an import reliance business model to creating a balance between the two.
“The retooling will eventually skew balance towards the domestic front as envisaged by the 22 percent growth to 71 percent in the local portfolio contribution to turnover.This has ignited firmer gross margins as local produce does not attract excise duty,” said EFE Securities in a report.
EFE Securities said it is expected that Afdis would increase its profits in the half year to December by 15 percent to $2,3 million from $2,08 million recorded in the full year to June 2014.
The Zimbabwe Stock Exchange-listed wines maker will likely achieve revenues of $25,2 million from $23,9 million recorded in the 12 months to June 2014 due to product portfolio expansion as well as product mix rejiggering, according to EFE Securities.
The equities research firm noted that Afdis’ envisaged product portfolio expansion sets a platform for future growth.
“This is only but a harbinger for better things ahead more-so with the better margins on the local brands,” read part of the report.