AFDIS, the ZSE-listed importer and maker of a range of spirits, wines and ciders, has said the spirits business will continue to anchor its performance despite coming under immense pressure from affordable low margin competing products.
In the year to June spirits volumes grew 26 percent contributing 62 percent to total volumes. Brown Spirits were up 49 percent in the period compensating for the five percent decline in white spirits.
Speaking at the company’s Annual General Meeting, Managing Director Cecil Gombera said volumes in the first quarter to September grew 20 percent and turnover was up 18 percent but the impact of the new cider plant was only felt in October.
“Performance in the first quarter was strong in spite of the pressure exerted on aggregate demand by declining disposable incomes,” said Gombera.
October performance had been strong with growth of 19 percent while ciders grew 63 percent.
The group showed strong volume growth in a difficult environment characterised by declining disposable incomes.
Gombera said the group would always seek to strengthen the fortification of its key brown spirits brand while crafting margin enhancements and growth strategies to combat the battle for market share in the white spirits segment.
On wines, Gombera said the main focus was on growing volumes through wider distribution of the products and exploiting the on-consumption outlets such as restaurants and cafes.
He said the locally produced Green Valley brand had witnessed a facelift in the form of a label and pack upgrade to a positive response from the market.
“Esprit has established itself well in the market while Savannah continues to grow. So overall there is good growth.”
Gombera said, as a whole, product affordability and price remained a major consideration in consumers’ purchasing decisions ahead of brand loyalty.
“This has become more evident on the mainstream and value product segment.”
Chairman Joe Mtizwa said the growth momentum was clear following the localisation of cider production. Ciders make up 10 percent of the portfolio.
In the year to June ciders and spirit coolers had declined 10 percent due to a 29 percent fall in cider volumes following a 25 percent increase in prices in response to the surtax and duties on the products.Advertisement
“Exciting times are upon us with the arrival of local production of ciders following the 5 million U.S. dollars capital raise. The plant is now fully operational with the products flowing into the market,” he said.
The group expects cost savings of around 30 percent from the localisation.
Two products had been introduced following the installation of the new plant – Esprit and Savannah Dark.