Spirits maker, African Distillers Limited (AFDIS) says the rolling power cuts worsened by Zimbabwe dollar liquidity constraints are threatening the smooth operations of its business.
Zimbabwe’s monetary authorities have been keeping a hawk’s eye on money supply in order to tame rising inflation and exchange rate pressures. They have achieved this by setting interest rates as high as 200 percent as well as managing bulk payments to its suppliers..
“The economic environment continued to present impediments that constrained business operations. Liquidity constraints in ZWL and power supply outages impacted negatively on operations and consequently on the ability to fully supply the market,” the company said.
In its third quarter trading update, AFDIS said despite these challenges the business was resilient enough to weather the storm due to increasing demand.
Resultantly, volumes grew 10 percent for the quarter and 11 percent for the nine months compared to prior year.
Spirits category grew by 19 percent benefitting from the focus on the affordable market segment as the business sought to regain share from cheaper and illicit products. Wine volume grew by 16 percent mainly driven by locally produced brands despite intense competition from imports.
Ready to Drink (“RTD”) volumes only grew by 3 percent due to stock supply gaps caused by power outages and regional bottle shortages.
The influx of cheap imported products on the domestic market is also threatening the company’s market share.
Cheaper and counterfeited brands of liquor are founding its way into the country through porous borders evading taxes.
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