Weakening demand hurts AfDis revenue

LISTED industrial concern African Distillers (AfDis) says revenue for the first four months ending October were lower compared to the same period last year as demand tapered on the back of a weakening economy despite growth in ciders and wines volumes.

The company said volumes of ciders grew by 56% after local production of the ready-to-drink alcoholic beverages in 2014 following the injection of US$5 million in fresh capital into the business.

“While business performance for the year was remarkably good, given the prevailing environment, current market demand remains depressed as disposable incomes continue to dwindle,” AfDis managing director Cecil Gombera said in a trading update to shareholders after the company’s annual general meeting.

“Overall volume performance to date is ahead of prior year driven by the growing demand for ciders and wines. Revenue performance however has lagged behind as spend on the high value spirits category tapers in line with the economic conditions.”

The company said investment in cold chain infrastructure for both on-consumption and off-consumption outlets would further boost volumes.

“Having grown a reasonable 8% above prior year in F15 and contributing 58% of total AfDis volumes, this product category faces severe challenges this current year,” Gombera said.

“Our brown spirits will no doubt continue to dominate the segment and gain market share driven by the popular Gold Blend Whisky. We expect the whisky segment to grow by an average of 22%. The white spirits segment faces completion from the affordable house brands launched by some retail chains but our vodka brand, Nikolai will contribute meaningful volumes for the business to remain competitive in the segment.”

He said the wines business continues to face stiff completion from competition, eating into the company’s margins.-Staff Writer