Things don't go better for Coke in forex-starved Zim

16 December 2018 - 00:05 By RAY NDLOVU


Ordering a Coke in Harare is a challenge because fast-food outlets, restaurants and eateries have run out of stock. It is even harder to find one in a supermarket, and the same goes for Fanta and Sprite.
Zimbabwe's foreign currency shortages have not spared the country's largest beverages maker, Delta Beverages, which is a unit of global giant Anheuser-Busch InBev. Like many other companies reliant on imports, Delta Beverages has been struggling to pay for the key ingredients in its soft-drinks range because of delays at the central bank in meeting requests for US dollars.
This has caused a Coca-Cola drought that is unlikely to end soon.
Sifelani Jabangwe, president of the Confederation of Zimbabwe Industries, the largest industry association, estimates that the manufacturing industry as a whole is waiting for at least $800m (about R11.3bn) in backlogged payments from the central bank.
Given the tough trading environment, Jabangwe says few companies and businesses will experience a consumer boom this festive season.
"It has been a trying period for business and because of the forex shortages we might not get a huge boom in terms of expenditure. It has really been a trying period from October to now and I think we can safely expect moderate business activity in terms of demand," he said.
Delta Beverages CEO Pearson Gowero said last week during a media tour of the company's facility that Delta had finally received foreign currency from the Reserve Bank of Zimbabwe, which would enable it to import the concentrate needed to make Coca-Cola.
"I am happy to say that I have received confirmation that the central bank has allocated us some money to bring in some concentrates for soft drinks.
"Therefore, we are working to get them in time for Christmas," he said.
But Gowero said there would still be a soft-drinks shortage over the festive season.
"As far as beer is concerned, we should be able to meet demand without too many problems. Soft drinks, clearly we are not able to do so. There is going to be some kind of shortage of soft drinks," he said.
In its half-year results ended September 30, released last month, Delta Beverages said it had experienced a 54% increase in volumes for lager beer and a 3% increase for sparkling beverages.
Firm demand, limited supply
It said there had been "disruptions to production" of its soft-drinks range due to limited access to foreign currency for concentrates and packaging material.
"There is firm demand, but limited supply is frustrating consumers," the company said. Revenue rose to $341m from $250m in the previous period.
But while Delta Beverages faces shortages of foreign currency, limited stock and growing frustration among consumers, rival PepsiCo, which officially opened a $30m bottling plant in March, has stepped up to the occasion.
Pepsi has now become the alternative to Coke in Zimbabwe - and the firm last month indicated that it planned to double production.
It is a development few would have imagined two years ago when PepsiCo, owned by India's Varun Beverages, announced plans to build a bottling plant in Zimbabwe.
At peak production, the plant outside Harare can fill 600 glass bottles and 400 cans a minute.
At the time the new plant was announced, commentators called it a brave move given the monopoly that Delta Beverages has enjoyed for decades in Zimbabwe.
Shortly before launching in Zimbabwe, PepsiCo had set up operations in neighbouring Zambia and Mozambique.
Varun Beverages, which is owned by Indian tycoon Ravi Jaipuria, who has an estimated net worth of $2bn according to Forbes, runs more than 20 bottling plants for PepsiCo in Asia and Africa.
A PepsiCo spokesperson said: "Through these new operations, run in partnership with Varun Beverages, we are bringing some of our most loved brands to the Zimbabwe market including Pepsi, Mirinda, 7Up and Mountain Dew."
In its third-quarter results for this year, PepsiCo said there had been a strong operating performance from the company's international divisions, "propelled by developing and emerging markets".
The company reported growth for its beverages segment outside the US of between 3% and 4%. The snacks segment grew between 4% and 5%.

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