Focus - The Zimbabwe drinks industry
The hardships facing the Zimbabwean population have become a regular and depressing feature of our news. Clemence Manyukwe reports from Harare on the particular problems that the country's sustained economic crisis and political turmoil are posing for Zimbabwe's drinks producers.
"Imagine a country with no Coca-Cola," a headline in Zimbabwe's weekly independent newspaper, the Financial Gazette, asked its readers recently.
The article quotes from the Bible, Proverbs Chapter 31 verse 7, which reads: "Let him drink and forget his poverty and remember his misery no more", aptly summing up the drinking patterns in a nation where poverty is widespread due to a current world record inflation rate of 11.7m% and rising.
Beverage production in Zimbabwe is currently being limited by a variety of factors including shortages of crowns, lids, carbon dioxide, and maize among other things, including coal, which the industry generally uses to fuel its production processes.
The shortages are a direct result of the nine-year-long economic crisis that critics blame on President Robert Mugabe's repressive rule and seizure of white-owned farms in a country where agriculture is the economic backbone.
Mugabe, in power since the country gained independence from Britain in 1980, was controversially re-elected in a one man presidential race on 27 June, following the withdrawal of opposition Movement for Democratic Change (MDC) leader Morgan Tsvangirai, who said that state-sponsored violence had left more than 100 opposition members dead.
In an interview George Mutendadzamera, a spokesperson for Delta Corporation, the country's largest beverage company which is listed on the Zimbabwe Stock exchange (ZSE) and part of the South African-listed SABMiller group, says that due to the unavailability of foreign currency all businesses that rely on imports would continue to face shortages as long as the current crisis persists.
Besides Delta Corporation, which produces both alcoholic and soft drinks, another key player in the business is the Mutare Bottling Company, jointly owned by Delta and Zimbabwe mobile telephone group Econet. Mutare produces brands such as Coke and Fanta under licence.
There are other numerous small breweries dotted around the country's cities that are mainly owned by city councils and are involved in the brewing of traditional or 'opaque' beer (made with sorghum). These include Pungwe Breweries and Ingwebu Breweries.
Among other raw materials, the industry imports a proportion of its coal and concentrates, posing headaches for companies in a country with an enduring and severe foreign currency availability crisis. The local industry requires fuel and coal because the bulk of the producers have not yet moved to modern brewing technologies that use other forms of power.
"The current economic environment will continue to have a negative impact on business operations," Mutendadzamera says. "All businesses that rely on imported inputs will continue to face shortages for as long as the unfavourable economic environment persists.
Our business faces the same challenges which every other business is facing, but we are hopeful that the environment will change for the better in due course."
A Manufacturing Survey carried out by the Confederation of Zimbabwe Industries said manufacturing had declined by 28% in 2007, following the 18% fall registered in 2006, due to a combination of factors including foreign currency shortages.
Mutendadzamera says as a result of the shortages, the industry is not exporting any of its production, with all the output being sold on the Zimbabwean market. "As you are, no doubt, aware the alcohol industry and the soft drink industry encompasses many businesses and no one company will have information on production and consumption statistics in the country," the Delta corporate affairs executive adds.
The country's Ministry of Industry and International Trade also cannot provide records on consumption or production levels, but last year the Central Bank chief said during a monetary policy presentation that Zimbabweans, faced with so many hardships, were now abusing alcohol.
"The distribution of soft drinks and alcohol is now limited due to shortage of fuel, with some routes especially in the rural areas being discarded," Delta Corporation said in a statement early this year. Last year, the company entered into a deal with a South African company to barter beer for an estimated 800,000 litres of diesel.
Shortages of clean water are another problem due to the lack of treatment chemicals, a development that has led the United Nations Children's Emergency Fund (Unicef) to take water bowsers to two Harare suburbs after an outbreak of diarrhoea.
But faced with these shortages, brewing companies have reacted positively. To get agricultural raw materials in the face of looming hunger following the collapse of the agricultural sector, companies have continued financing farmers to grow maize, sorghum and barley, which are used in the brewing of lager, as well as red malting sorghum to brew opaque beer, under contract farming schemes.
To ensure success, agronomists from the breweries offer technical advice and assist in monitoring crops in the field from planting to harvesting.
"The contract scheme programme ensures that prescribed varieties with good agronomic, malting and brewing properties are grown making sure that a varietal improvement programme is in place. This is a critical programme whose results, over the years, have been pleasing," Delta said in a statement.
But worse times could still be looming for Zimbabwe's drinks industry, with recent Government attempts at price controls threatening the viability of drink manufacturers.
Mugabe's government has often accused private businesses of trying to topple him through price hikes to foment discontent, a development that has seen his administration setting prices that sometimes do not allow companies to break even, especially during this period of sustained hyperinflation.
Cephas Moyo, spokesperson for Pungwe Brewers, says that since last December its branded traditional beer has been facing stiff competition from home-made beers, as people resort to brewing their own in the face of hardships. Of late, Zimbabwean newspapers have been awash with stories of people dying after consuming home-brewed beer, particularly Kachasu, an illicit local brew made from yeast, porridge and fertiliser.
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