Afdis to accelerate localised production

LIVINGSTONE MARUFU

Zimbabwe Stock Exchange- listed African Distiller (Afdis) plans to localise the production of wine and ciders as it moves to cut costs, an executive has said.

The company has been grappling with foreign currency challenges to import wines and ciders as it could not get adequate money on the auction system.

Afdis managing director Stanley Muchenje told Business Times that the job at hand is about how to accelerate business growth rather than turning around the performance.

“We will seek opportunities for growth through expansion of our distribution, demand creation through brand equity building, localisation of wine production and further localising the cider production processes to reduce costs.

“Increased localisation of wine and cider production processes will improve business profitability by lowering costs while improving product availability which should enable the company to fully supply the market and take advantage of volume growth opportunities,” Muchenje said.

The company is investing US$1m in plant and equipment to ensure efficient production of high-quality wine and ciders.

He anticipates that Covid-19 will prolong for the foreseeable future, and the company has built its business continuity plan on prior year lessons on running the business under restrictions.

Afdis slipped into a ZWL$407.4m loss in the nine months to March 31, 2021 from a profit of ZWL$709.4m delivered in the twelve month to June 2020 on the back of an increase in cost of sales and exchange losses.

The wine and spirit maker has changed its financial year to March 31 from June 30 following the acquisition of additional shares by Delta Corporation, effectively making it a subsidiary of the country’s biggest brewer. The change of the financial year was meant to align it with the group.

 Afdis chairman Pearson Gowero said the company would continue to focus on strategies that enhance revenue growth opportunities, cost containment and improve production efficiencies.

Revenue for the company in the reviewed period rose by 11% to ZWL$2.8bn from ZWL$2.8bn achieved in the 12 months to June 30, 2020 on the back of firm demand of company products which resulted in high volumes.

Volumes grew by 34% driven by spirits and ready to drink which grew by 50% and 22% respectively.

“Afdis showed commendable resilience to report a 34% growth in volume for the nine months at a time when access to the market was partly hindered by Covid-19 restrictions,” Muchenje said.

Total assets shrunk to ZWL$1.9bn in the reviewed period from ZWL$2.4bn.

Net cash on hand was ZWL$75m. This was largely made up of foreign currency at the banks awaiting remittance to foreign suppliers.

Gold Blend Number 9, which was a new product, was launched in the spirit category and was well received by the market thereby impacting positively on the performance of brown spirits, Gowero said.

He said business continuity plan was in place and management continued to observe and implement protocols in accordance with published government and World Health Organisation guidelines.

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