Smuggled illicit products chip off AfDIS market share

LIVINGSTONE MARUFU

African Distillers (AfDIS), a producer of spirits and wines, is seeking government intervention to stop the flow of cheap and illegally imported goods that are posing a serious threat to its business.

AfDIS,  used to enjoy a monopoly in  spirit and wine market in Zimbabwe.

Apparently, AfDIS’ managing director, Stanley Muchenje, told Business Times this week that the illicit products have chipped off  around 30% of the company’s  market share, which is alarming.

“We are planning to ramp up production during this forthcoming festive season but we are under  serious pressure  from smuggled and illicit products which continue to find their way into the country’s borders. These have taken a  chunk of the market share and there is a need for increased monitoring on the borders to reduce the cheap stuff into the country,” Muchenje said.

He claimed that although AfDIS had lowered prices and increased production to drive up volumes, illegally obtained goods continue to be a formidable force.

As long as it keeps selling products at fair prices in hard currency, the company expects revenue growth to continue.

“Spirits volume grew by 1% while wine category volume declined by 13% due to competition from cheaper imported brands and reduced consumer traffic in key account retail chain stores which impacted negatively on demand,” company secretary Lydiah Mutamuko said in a trading update for the  first quarter  to June 30, 2023.

With the continued rise in the use of US dollars, AfDIS observed a sizable shift in business from formal retail chains to smaller traders.

As a result of being in the high-demand area for illegal goods, the company had to significantly lower prices.

AfDIS said this  enabled the company to meet its foreign currency working capital requirements.

The management, Mutamuko said keeps taking action to take advantage of opportunities to maintain market share, revenue, and profitability growth.