Afdis courts shareholders on expansion funding

Published: 01 October 2013

ZSE-listed wines maker, African Distillers Limited (Afdis), says it is finalising funding options with key shareholders over its expansion drive.

Afdis - whose major shareholders include SABMiller associate Delta Corporation and insurance giant Old Mutual - has of late been seeking new funding, earmarked for maximising production efficiencies as well as entrenching its market position.

"Funding options for this expansion programme are currently being finalised with the planned commissioning date of this exciting project being June 2014," said Cecil Gombera, Afdis managing director.

He added that the development is aimed at increasing the company's market share and unlocking shareholder value.

"We have plans to expand our local manufacturing base and will therefore be focusing on factory refurbishment which will include among other things, installation of a new bottling line to enable manufacturing of "ready-to-drink products" some of which are currently being imported," he said.

Since the introduction of the multiple currency system 2009 and the subsequent liberalisation of the economy, Afdis has been facing a number of challenges such as liquidity constraints and increased smuggled alcohol into the country - have eaten into the company's market share.

Gombera noted that liquidity challenges in the country have impacted on Afdis business, and dwindling per capita incomes have also affected demand resulting in low capacity utilisation.

"Smuggling of products from South Africa has had its fair share of problems affecting Afdis," he said.

Economic experts contend that smuggled alcoholic beverages continue to find their way into the country resulting in the government losing revenue on unpaid duties as well as inhibiting local production growth.

Gombera said there should be stringent entry point and border post management and "we suggest inspection of product in the trade would put a stop to this".

"Market share growth remains of paramount importance in all market segments we participate in and great effort to recover lost share forms the basis of current strategies.

"Future plans include increased local production of most of the imported products and improved product availability," he said.

The country's leading wine and spirits distiller laid the foundation of future growth with a strong emphasis on local production following a 21 percent growth for the half year ended December 31, 2012.

"We are confident of the brands we market and look forward to working well with both our customers and suppliers," said Gombera.

Afdis - which was founded in 1944 and listed on the local bourse in 1951 - is involved in the manufacture, distribution and marketing of branded wines and spirits for in Zimbabwe, as well as for export.
- dailynews