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Senior Business Reporter
AFRICAN Distillers (Afdis) Limited has temporarily shelved plans to export its beverage products due to the weakening of regional currencies against the United State (US) dollar.
Afdis managing director, Mr Cecil Gombera said the strengthening of major currencies against regional currencies was threatening the competitiveness of exports and as such the company had deferred further exploring both the Southern Africa Development Community (Sadc) and Common Market for Eastern and Southern Africa (Comesa) trading blocs.
The company had anticipated exploring Sadc and Comesa markets following increased production after it commissioned its state-of-the-art $5 million cider production and packaging line in 2014.
Last year it penetrated Malawi and had set sight at further exploring the regional while it was also working towards a Comesa certificate of origin to start exports into the bloc.
“The strengthening of the US dollar against regional currencies makes exports out of Zimbabwe highly uncompetitive in the regional market. As a result we have not made much progress in exporting to other countries. “We continue to watch the environment while focusing on growing consumption within the domestic market which itself is constrained by the severe decline in disposable incomes,” Mr Gombera said.
He said the company was still waiting for the processing of its Comesa certificate of origin though it remains sceptical about prospects of atoning viable business from the trading bloc.
“It is a process, we are still in discussions with the relevant authorities while watching the performance of currencies in the region to identify export opportunities when the situation improves,” Mr Gombera said.
He said the company was satisfied with the performance of its Green Valley wine which it upgraded early last year and 4th Street wine, which launched in the same year.
“Green Valley performance is stable and we strive to achieve growth. 4th Street, being very new on the market has grown significantly. This is commendable performance given the fact that overall market is in decline. These natural sweet wines attract a new, younger consumer into the wine category and 4th Street plays a significant role in this regard,” Mr Gombera said.
The company’s locally produced ciders seem to have been well accepted with a growth of 56 percent as reflected in its financial year ended June 2015.
Bulawayo-based economist, Dr Bongani Ngwenya said as long as the US dollar continues to firm or gain in value against regional currencies exports would continue becoming expensive and uncompetitive in terms of price but hinted that this should not stop companies from exporting “unless if it’s a situation of plummeting demand of our products by our regional trading partners because our products are subsequently expensive. If our regional trading partners have not rationally responded and acted in that direction, why would we want to stop exporting to them?”
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