Delta associate entities worry over counterfeits, illegal imports influx Delta Corporation Limited

Michael Tome, Harare Bureau

DELTA Corporation Limited associate entities have bemoaned the negative impact of the growing influx of counterfeit and smuggled imported products from regional countries on operations.

African Distillers (Afdis) said its business was being weighed down by illicit brews made in backyard industries and imported wines and ciders illegally brought into Zimbabwe.

This has had a significant negative effect on volume growth as consumer demand shifts towards alternative products.

Another associate company of Delta, Schweppes Zimbabwe, has been noticing a surge in smuggled imports of its flagship Mazoe Orange Crush from regional markets.

However, several challenges emanating from fiscal regulations like the sugar tax, and the route to market policy also weighed down volume uptake for the company.

The influx of smuggled counterfeit goods has been growing in the country lately and the development has been blamed largely on porous border entries.

In some instances, elements within the country’s immigration authorities and Zimbabwe Revenue Authority (Zimra) have been accused of being complicit in the smuggling of goods.

Despite legislation, legal enforcement and various efforts to fight informal imports, illicit and smuggled goods available in the market continue to increase.

According to the Consumer Protection Commission (CPC), some of the illicit brews are being made in backyard industries while some are being smuggled into the country through porous border posts, disillusioning customers who end up settling for cheaper but substandard products.

This situation has been exacerbated by the allure of US dollars for foreign traders seeking to exploit the availability of US currency in the Zimbabwean market.

Local firms and SMEs in general are being affected by this unfair competition with products that do not go through formal channels and find their way into the market.

“Schweppes Holdings Africa Limited recorded a volume decline of 12 percent for the quarter, primarily due to significant price increases resulting from the sugar tax, which particularly affected cordials.

“The sector is further weighed down by a surge in informal imports of the flagship Mazoe Orange Crush from regional markets, driven by the price disparity created by the new tax. 

“Volume was also impacted by disruptions in the route to market arising from the fiscal regulations,” Delta company secretary Faith Musinga said in a trading update for the first quarter ended June 30, 2024.

A cross-section of industrialists suggests that a multi-stakeholder approach is needed to curb the menace, working with the private sector.

Schweppes Zimbabwe, however, recorded encouraging recovery in juice drinks and bottled water volumes following the installation of the new plant in October 2023.

Also despite the challenge of smuggled products and counterfeits, Afdis saw an increase in volume growth in the wines and ciders segment.

“African Distillers Limited (Afdis) is concerned about the increase in informal imports and the prevalence of illicit offerings.

“However, we recorded a volume growth of six percent for the quarter compared to the previous year, benefiting from improved product supply and some price moderations,” she added.

Afdis revenue for the first quarter to June 30, 2024, totalled US$12,6 million but remained at par with the comparable quarter.

Managing director Stanley Muchenje told shareholders at the company’s annual general meeting that “Revenue performance was negatively impacted by sales mix issues as well as the reduction in prices as the business positioned itself to protect market share from both imported products as well as the local affordable spirits that are also in the markets”.

Looking ahead, the spirits and wine producer aims to sustain growth by ensuring product availability across all categories.

Delta Corporation anchored its prospects going ahead on projected economic growth driven by public infrastructure projects, the performance of tourism, mining, and increased diaspora remittances.

 

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