Delta Corporation Limited’s associated entities are expressing concern about the adverse effects of counterfeit and smuggled imported goods on their operations.
African Distillers (Afdis) has reported that its business is suffering due to illegal brews produced in informal settings and wines and ciders smuggled into Zimbabwe. This influx has notably hindered their volume growth, as consumer preferences shift towards these alternative products.
Similarly, Schweppes Zimbabwe, another Delta associate, has observed a rise in smuggled imports of its popular Mazoe Orange Crush from regional markets. Challenges such as the sugar tax and market access regulations have also negatively impacted the company’s volume performance.
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The increase in smuggled and counterfeit goods is largely attributed to inadequate border controls. There have been allegations of complicity among some immigration officials and Zimbabwe Revenue Authority (Zimra) personnel in facilitating these illicit activities.
Despite existing laws and enforcement efforts, the market continues to be flooded with unauthorized products. The Consumer Protection Commission (CPC) has noted that some of these illicit products are manufactured locally in unregulated settings or smuggled through poorly guarded border points, leading consumers to choose cheaper, lower-quality options.
The situation has been worsened by foreign traders’ preference for US dollars, which has incentivized smuggling activities. Local businesses and SMEs are struggling with this unfair competition from goods that bypass formal import channels.
Schweppes Holdings Africa Limited reported a 12 percent decline in volume for the quarter, primarily due to significant price hikes from the sugar tax affecting their cordials. The company also faced challenges from informal imports of Mazoe Orange Crush and disruptions related to market access regulations, according to Delta’s company secretary, Faith Musinga.
Industry leaders suggest a collaborative approach involving various stakeholders and the private sector to tackle the issue. Despite these challenges, Schweppes Zimbabwe saw positive results in juice drinks and bottled water volumes following the installation of a new plant in October 2023.
Afdis also experienced a six percent growth in wine and cider volumes for the quarter compared to the previous year, despite the increased presence of informal imports and counterfeit products. Afdis reported a revenue of US$12.6 million for the first quarter ending June 30, 2024, maintaining consistency with the same period last year.
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Managing Director Stanley Muchenje noted that revenue was affected by changes in sales mix and price adjustments made to maintain market share against both imported goods and local affordable spirits.
Looking ahead, Delta Corporation is focusing on leveraging anticipated economic growth driven by infrastructure projects, tourism, mining, and increased remittances from the diaspora to support future growth.
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