Afdis ready-to-drink plant funding gets nod

SPIRITS maker African Distillers shareholders have approved a $5 million rights offer that is earmarked for the procurement of a new ready to drink plant that has the capacity to produce 27,000 bottles an hour. The plant, which will make 20 million litres of ciders annually, will be commissioned in July 2014.

The funds will also be channeled towards upgrading of the existing manufacturing plant at the company’s premises in Stapleford.
The company had since secured an estimated cost of $1,5 million as shareholder loans from Delta Corporation and South Africa-based Distell which has since been paid to the German firm supplying the Kronz plant.

Speaking in an interview after the extra ordinary general meeting, Afdis marketing, sales and distribution director Albert Chitapi said the new plant would more than triple cider volumes to over six million from the current two million while over the next five years, production is expected to increase five-fold.

“The plant will enable the company to be competitive in the regional market and meet the ever growing demand from discerning consumers. Last year we imported two million litres of ciders, we will also import about the same quantities this year.

However once we start local production, that number goes to 6,6 million litres with 50 percent being produced for local consumption while the difference will cater for the export market in Zambia, Malawi and Mozambique. As that number progressively grows in 2016 and 2017, it will be in the ranges of 10 to 12 million litres, while the 50-50 split is maintained.”

Chitapi said the biggest benefit would be a very affordable price which will give the consumers an opportunity to associate with a product they always felt was beyond their reach. “The cider is currently ranging between $3 and $3,50 but I can tell you when we launch local production, we will be looking at prices far less than $1,50.

The price will also contribute in fighting the smuggling of ciders into the country. In addition to this, we will boost our production by 25 percent next year in other beverages independent to the new plant,” he said.

Speaking in a separate interview, chairman Joe Mtizwa said the low pricing is not aimed at killing competition but levelling the playing field.

“It is not our intention to kill competition, but it’s our intention to level the playing field so that there is fair trading, and whenever we see there are people smuggling products into the market, we will alert the authorities so that they can take appropriate measures. We like fair competition but we as Zimbabweans are very unhappy when imports flood  our market through smuggling.

We are confident we will be able to improve the distribution of the ciders since we will be producing them locally. The quality will remain the same, the brand profile will also remain the same,” he said.

Mtizwa said Afdis would strive to maintain its double digit growth but however lamented the low disposable incomes prevalent in the economy.

Mtizwa said the rights issue means the company can make progress towards cost reduction and growing volumes — FinX.