LIVINGSTONE MARUFU
Listed spirit and wine maker, African Distillers (Afdis), is setting up a US$1m cider fermentation plant, a move which would help the company reduce its foreign currency requirements, it has been learnt.
Afdis managing director, Stanley Muchenje, said the plant will be completed in the first quarter of this year.
“We are in the process of setting up a cider fermentation plant which is expected to be completed by April (this year). Various equipment and material were imported from South Africa with tanks already in the country.
“The US$1m is mainly for hunters dry and hunters gold but other ciders can also be processed in that plant to cut costs,” Muchenje said.
In its financial results for the six months to September 30 2021, Afdis’ profit slumped 71% to ZWL$46m from ZWL$156.2m reported in the same period the previous year amid indications that the illegal beers flooding the market affected the company’s sales.
Afdis chairman Matlhogonolo Valela said the localisation of some products and product innovation would sustain the operations of Afdis in the wake of illegal beers.
Overall volumes in the period under review increased 66% over the same period the previous year.
Valela said wines and spirits volumes grew 88% and 34% respectively.
He, however, said the company continued to observe the presence of cheap and illicit spirits in small packs.
The ready to drink segment volumes grew 116 % compared to the prior period, achieving the largest growth of the three group’s categories due to improved availability of ciders.
Revenue increased 55% to ZWL$2.6bn compared to ZWL$1.7bn reported in the comparable prior year period.
Operating income, however, declined to ZWL$226.3m in the period under review from ZWL$418.7m reported in the same period in the previous year.
The company said the slower growth in operating income is as a result of cost normalisation, increased distribution and Covid-19 related expenses while growth in both inflation and historical terms was due to firm demand which resulted in higher volumes.
Afdis will focus on localising some of its brands as well as explore revenue and profitability growth opportunities through product innovation, riding on a stable operating environment.
This will also help the company to deal with Covid- 19 supply challenges that normally happens whenever there is a strict lockdown.
Afdis manufactures, distributes and markets branded spirits, ciders and wines in the Zimbabwe and export markets.
The company’s investments would ride on the operating environment, which is expected to largely remain relatively stable.
Muchenje said Afdis management will continue to explore growth opportunities and expand market share as well as improve production efficiencies and cost containment.
The group closed the period with net cash on hand of ZWL$174m.
