Beer, soft drinks shortage looms this festive season

HARARE - The good cheer that normally comes with the festive season risks being dampened by shortages of beer and soft drinks because of serious constraints in the supply chain, the Daily News reported today.

Due to acute foreign currency deficiencies gripping the country's economy, Zimbabwe's largest beverages manufacturer, Delta Corporation Limited, is struggling to source raw materials and spares to meet resurgent demand for their products, thus giving rise to the impending shortages.

Formed way back in 1898, Delta is a dominant player in the beverages sector, with interests also in the agro-industry.

Its beverage business manufactures and distributes lager beer, traditional sorghum beer and sparkling soft drinks.

Delta's company secretary, Alex Makamure, said the foreign currency situation needs to be urgently addressed to avoid a crippling shortage of soft drinks and beer amid surging demand associated with the festive season when consumption of those products peaks.

"The group has a significant backlog of foreign payments, which has resulted in suppliers limiting the supply of key raw materials and spares. This is likely to impact our ability to fully service the market, particularly early in the 2018 calendar year," he said.

Makamure said the Zimbabwe Stock Exchange-listed concern remained hopeful that it will be allocated reasonable amounts of foreign currency in the coming weeks before the situation deteriorates any further.

He said the group has witnessed a significant surge in the demand of lager beer since last month, well beyond the normal festive season increases.

"We have largely been able to meet the overall demand albeit with some mismatches in brands and packs. We are confident that we will meet the demand in the remaining days leading to the Christmas and New Year holidays," said Makamure.

The widening shortages of popular beer and soft drinks' brands cast a dark shadow on the festive season.

A survey by the Daily News revealed that some imported beers favoured by many consumers such as lagers Heineken, Guinness and Miller have long disappeared from the retail outlets because suppliers are starved of foreign currency required to bring them into the country.

Apart from imported beer, soft drinks which are locally manufactured are being intermittently supplied as the beverages giant struggles to fully-service the market.

Some of the raw materials used in the production of beer and soft drinks that are currently in short supply include malt, brewer's yeast, probiotic bacteria, carbon dioxide and preservatives.

What has not helped matters are the frequent machinery breakdowns that have had a negative effect on beverage production.

Delta experienced prolonged breakdown of its PET plant at Bon Accord in Bulawayo partly due to the unstable power grid in the industrial areas supplied by the Mpopoma substation and longer lead times in getting imported spares.

PET is the synonym for polyethylene terephthalate. Bottles made of PET can be recycled to reuse the material out of which they are made and to reduce the amount of waste going into landfills.

"We have a backlog in servicing our accounts with key foreign suppliers," said Makamure.

"We would traditionally import some canned beverages to cover the gap between our production capacity and the increased demand during the Christmas period. This is not possible due to the current foreign currency shortages. We hope this will be mitigated through the increased supply of alternative packs such as PET and returnable glass," he added.

It is not just beer and soft drinks in short supply.

Consumers are also feeling the full effects of Avian Bird flu, which severely affected the production of chicken and eggs at the country's major breeder, Irvine's.

Currently, Irvine's is importing eggs for its hatcheries to fully service the day old chicks' market.

In the meantime, there are widespread shortages of eggs and chicken.

This comes at a time when government has ordered the reversal of the price increase on bread to avoid social unrest and keep the product within the consumer's reach.

Industry, Commerce and Enterprise Development minister Mike Bimha has also directed the National Competitiveness Commission to investigate the entire value chain in a desperate bid to address the challenges facing the baking industry.

Analysts fear that Bimha's directive may result in bread disappearing from the formal market into the black market where it will be available at exorbitant prices.

The price increases have largely been caused by the foreign currency shortages, which have forced companies to source expensive foreign currency on the parallel market to meet their import requirements.

There have been challenges in accessing foreign currency from the central bank because of the serious mismatch between imports and exports.

The country has not been producing enough for the export market to be able to generate sufficient foreign currency required to pay for its imports.

Under the circumstances, companies wishing to import raw materials or finished products either will have to wait for the Reserve Bank of Zimbabwe to have enough foreign currency, which could take several months, or resort to the black market where they are charged high premiums.

Resultantly, prices of most basic commodities have rocketed as retailers pass onto the consumer the extra costs.

In September panicking citizens stampeded to hoard basic consumer goods when they were alarmed by worsening foreign currency shortages and the resurfacing of long fuel queues at most garages.