LISTED spirits and wines producer, African Distillers (Afdis) says its wine volume declined by 13 percent in the first quarter ended 30 June due to competition from cheaper imported brands and reduced consumer traffic.
In the period under review, the firm registered 11 percent volume growth above the prior year mainly driven by the Ready-to-Drink segment which grew by 26 percent owing to improved product availability.
In the spirits unit, volume grew by one while wine category volume declined by 13 percent with the firm citing competition from cheaper imported brands and reduced consumer traffic in key account retail chain stores which impacted negatively on demand.
Revenue for the quarter grew by 143 percent in inflation adjusted terms over last year, while in historic cost terms grew by 808 percent.
“In USD, turnover grew by 15 percent to US$12.5 million. Revenue growth was due to increased volume and inflation related price adjustments,” said the firm.
The listed firm said the quarter under review saw a considerable shift of business from formal retail chain stores to smaller traders as the use of US dollar continued to increase. It noted that the period under review was characterised by significant local currency volatility, high interest rates and power supply outages which constrained business operations.
However, it said in response, the Government introduced a string of measures to stabilise the economy which included liberalisation of the foreign currency exchange market and directing taxpayers to pay taxes in local currency.
It acknowledged that the measures resulted in tightened liquidity and recovery of the Zimbabwean dollar towards the tail end of the quarter.
It said trading in a multi-currency environment enabled it to meet its foreign currency working capital requirements.
Going forward, the listed firm said the economic environment still presents an opportunity for business growth. To that end, management continues to put measures in place to exploit the available opportunities to sustain market share, revenue, and profitability growth.
“Focus will also be on product innovation, production efficiencies and cost containment measures,” it said.