New plant boosts Afdis volumes

LISTED wines and spirits producer, African Distillers Limited (Afdis) has reported a 20% growth in volumes and an 18% bump in turnover in the first three months of its financial year to September compared to the same period last year largely driven by its new cider production line, the company has said.

Taurai Mangudhla

A further 18% growth in cider volumes was recorded in October, chairman Joe Mutizwa said at the company’s annual general meeting on Wednesday.

Afdis MD Cecil Gombera told the meeting the period under review was characterised by a largely competitive environment which was dictated by product availability and pricing differences.

“This became more evident on the mainstream and value product segment while our premium brands benefitted from a very strong market position and remained significant contributors to the overall business performance,” Gombera said in his trading update.

The Afdis MD also said product innovation became a key strategy for growth as two products were sucessfuly introduced to the market namely Espirit and Savanna Dark.

“Savanna Dark which we launched as a brand extension continued to grow and we witnessed growth in the last quarter,” Gombera said.
In the full year to June 2014, the company reported a 10% slump in its ciders and ready to drink spirit coolers sales largely owing to an escalation in tax and duties for the products.

The 10% decline was largely due to a 29% fall in cider volumes following introduction of surtax and other duties by government on cider and spirit cooler imports, effectively pushing prices for the products by 25%, Gombera added.

He said this resulted in sales dropping as consumers are hard pressed for cash due to a number of macroeconomic challenges that have seen people lose their jobs or go for months without pay.
Gombera said the new Savanna and Hunters plant which is now fully operational following a US$5 million rights issue last year to fund procurement of the ready to drink plant. It is expected to change the face of the company’s cider business. The new plant was procured from Germany and has capacity to produce 27 000 bottles of ciders –Hunters and Savanna- per hour locally. It can produce 6,5 million litres of ciders annually.

Last month, Mutizwa said the company sees output rising 60% in this financial year buoyed by a newly commissioned Savanna bottling plant. He said the plant could result in prices for the products falling between 22 – 25%.

Mutizwa said the new packing line has capacity to produce around 4 200 litres of ciders per hour from initial 1 300 litres per hour previously. This equates to 15 000 bottles per hour.

The company’s wine business also registered a 6% fall in volumes as overall economic conditions deteriorated,Gombera noted.

“In addition, this (wine) sector witnessed proliferation of new imported wine brands as the nation turned to trading,” he said.
“It is, however, pleasing to note that still wines grew by 3% and contributed 68% of the total wine business and focus is on growing volumes through wider distribution of these products and exploiting the on-consumption outlets such as restaurants and cafes.”

Gombera said the locally produced Green Valley, which has been face-lifted in the form of label and pack upgrade, is now competitive.
He said on trade activities targeted at product trial as well as improved merchandising techniques, which he could not be drawn to specify, will assist volume performance going forward for the wine business.