Kudakwashe Mhundwa Business Reporter
Spirits and wine maker, African Distillers Limited (Afdis), says it will embark on plant and equipment upgrade to enhance production as the firm maintains a double digit growth in volumes. Afdis managing director Cecil Gombera, told shareholders at the group’s annual general meeting yesterday that the firm was looking at ways of cushioning itself in the face of uncertain business environment characterised by foreign currency shortages.
“The investment climate is not conducive but we are looking at the various options to do with our production facilities to try and ensure that we do several upgrades where we can use local funds to purchase such facilities. Current business performance while satisfactory, has been strained by product supply gaps emanating from foreign currency shortages,” said Mr Gombera.
He added that while both volume and revenue for the first quarter were slightly below budget, the trend had since improved with October registering growth. Mr Gombera said demand for wines has remained firm, despite supply constraints in recent months but efforts are being made to ensure adequate supply during the peak period.
The recent pack upgrade for Chateau has started showing positive results and the brand is expected to grow on prior year. Viceroy and Gold Bland continue to occupy strategic positions on the market and the business will continue to support these brands to protect their respective market shares. Spirits, both brown and white have remained the biggest contributors to both revenue and volume at 65 percent.
Chairman Mr Pearson Gowero said: “All three product categories registered double digit growth with wines leading the pack at 29 percent, spirits continue to be the major revenue contributor at 66 percent, ready to drink (ciders and spirit coolers) contributed 24 percent, registering a 22 percent volume growth.” He, however, highlighted that while the demand for product was firm the company did not fully satisfy demand due to inter-midterm product shortage as a result of foreign currency shortages.
In the year to June 30, 2017 Afdis recorded an improved performance due to an 18 percent volume increase complemented by a reduction in overheads as the company launched new product lines for the low-end market. He also mentioned that the company had since secured approvals from the Zimbabwe Stock Exchange to establish four million employee share option scheme meant to incentivise and retain employees.