WINES and spirits beverage maker, African Distillers Limited (Afdis), is preparing for a sober outlook amid revelations retail business closures would affect its operations.
In its half-year financial report ended September 30, 2024, Afdis reported that the current limited access to foreign currency and erratic power supply would continue to present challenges for the business.
The business was hopeful that the measures implemented by authorities to stabilise the local currency would create a more conducive trading environment.
Fast-forward to 2025, however, and the limited foreign currency in the country, erratic power supply and, mostly, exchange rate volatility have pushed some retailers to branches or leave their shelves empty as suppliers demand forex.
During a tour of the company’s facilities by NewsDay Business last Friday, Afdis managing director Stanley Muchenje described the impact of the business closures to the paper.
“Of course, the closure of companies and retailers have an impact on every business somehow. So, when you look at that retail space, they offer us what we call the ‘theatre of retail,’ where we can display our products to new consumers; you can come through; you enjoy the shopping experience; that ambience,” he
said.
“So, they are critical, but at the same time, we can help improve and preserve just how you trade under certain conditions. And to the earlier point that you made, when they struggle, because a chunk of us need access to markets, they are going at times even with some numbers on our books.”
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Zimbabwe has recently seen a wave of business exits and closures, as the exchange rate volatility and the central bank-induced liquidity squeeze to sustain the domestic currency are making it hard for these entities to restock or continue operating.
The tough economic environment has also affected disposable incomes, affecting the bottom line for retailers and thus suppliers.
Notable retailers facing pressures include Choppies, N Richards, Spar and OK Zimbabwe.
OK Zimbabwe, in particular, has recorded empty shelves as it struggles to restock as most suppliers want to be paid in foreign currency.
“The increasing dollarisation of supply chains, with suppliers demanding up to 85% of payments in US$, has placed significant strain on retailers operating in a dual-currency economy. Many businesses hold large stocks of Zimbabwe Gold (ZiG), which cannot be easily converted into foreign currency for restocking purposes,” Confederation of Zimbabwe Retailers (CZR) revealed in a Mutare post-budget review last week.
“This imbalance threatens the viability of formal retailers and wholesalers. CZR urges government to introduce policies that stabilise the ZiG long term, incentivise its use and enforce dual-currency regulations in the supply chain. Addressing this issue is critical to maintaining supply chain stability and ensuring businesses remain operational.”
In its half-year report, Afdis said management continued to focus on exploring opportunities for market share growth, revenue, and profitability anchored on product innovation and enhancement, production efficiencies and overhead containment.
Muchenje is committed to strategies aimed at protecting its market share, boosting sales, and ensuring profitable growth.
