Pricing strategy boosts AfDIS performance
BUSINESS REPORTER
African Distillers (AfDIS), a listed producer of wines and spirits, reported a profit after tax of ZWL$22.37bn in the six months to September 30, 2023, up from ZWL$2.056bn in the prior comparative period.
Chairman of AfDIS Matlhogonolo Valela ascribed the rise to exchange rate-tracking pricing and large volumes.
“In inflation adjusted terms, revenue increased by 156% to ZWL$134bn whilst operating income increased by 311% to ZWL$ 28.30bn.
“Revenue growth in both inflation adjusted was driven by the higher volume, favourable sales mix, and replacement cost-based pricing while operating profit increased due to volume growth and strict cost containment measures,” Valela said.
Thanks to increased product distribution, strong product availability across all major brands, and brand innovation, the company saw an 11% increase in volume over the previous year.
Wine volume increased by 7% as a result of greater market penetration in the second quarter, while the spirits category grew by 8% thanks to the premiumization of the Whitestone brand and strong demand for the affordable range.
Despite competition from lower-priced smuggled imports, the Ready to Drink (“RTD”) segment saw a growth of 14%.
Despite a strong performance, according to Valela, the operating environment under review was marked by high inflation and an unstable exchange rate, especially in the first quarter. In contrast, the second quarter saw relatively stable prices and tight liquidity for Zimbabwean dollars.
He claimed that price distortions in the formal retail channel caused by currency had a detrimental effect on consumer demand.
“The informal trade benefited from the stable and competitive pricing in United States dollars. Consumer spending was also spurred by the election related activities,” Valela said.
After a fantastic performance during the period under review, the company decided it was worthwhile to pay a dividend.
