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Import restrictions: Distributors of foreign brands cry foul

Companies involved in the distribution of international consumable brands have accused local manufacturers of “backbiting”, making it difficult for them to obtain import permits from the Industry and Commerce ministry.

BY TATIRA ZWINOIRA

Confederation of Zimbabwe Retailers president Denford Mutashu
Confederation of Zimbabwe Retailers president Denford Mutashu

Distribution companies are responsible for bringing in the brands into the country. These brands are slowly disappearing from the retail shelves after government restricted importation of some products in a bid to boost local production.

In June, government promulgated Statutory Instrument (SI) 64 of 2016 to restrict the importation of 43 products.

Government said those who wanted to import the restricted products had to apply for quarterly permits that were granted once the applicant satisfied authorities on why the permit should be issued.

SI 64 joins similar regulations that were introduced in the past to promote local production and curtail imports.

Distribution companies who spoke to Standardbusiness said local players were riding on government’s drive to support local industry to discourage the issuance of import permits.

They said when they wrote letters to the Confederation of Zimbabwe Industries listing complaints for onward transmission to the Ministry of Industry and Commerce, they received the same negative response that they “explore local production”.

Disgruntled distributors say these restrictions were costing government millions in taxes and levies at a time it was struggling to raise revenue.

On average, local players do not pay as much in taxes, levies and duties compared to distribution companies.

Products that have disappeared from the market include the Lays and Simba potato crispy chips brand.

Currently, Cairns Foods’ flagship potato chips product, Chompkins, is dominating that space.

Exclusive distributors of Lays and Simba potato chips, Cold Chain Zimbabwe, said before the restrictions, they were paying $1 million monthly in duties, levy and taxes to the Zimbabwe Revenue Authority.

Cairns Holdings Limited chief executive officer Nancy Guzha said her company had no influence in the issuance of import permits to their competitors.

The group is a the parent company of Cairns Foods.

The group is accused of supplying the market with products without expiry dates, contravening Standards Association of Zimbabwe regulations.

But Guzha defended this development saying: “Cairns re-launched its potato crisps two months ago, and as part of the innovation, the packaging was refreshed, which necessitated the resetting of the date coder. During the process, one of the date coders temporarily lost its settings, and was stamping the date in an incorrect position on the packaging, but with the date code still reflected. The packets that went into the market with the date code in the wrong position were a tiny fraction of our production,” Guzha said.

“As soon as this wrong positioning of the date coder was discovered, it was immediately rectified and the coder was realigned. However, it is worth emphasising that at no point was there any cause for concern as the average lifecycle of our product [from the warehouse through the trade and to the consumer] is six weeks at a maximum, while the chips product shelf life is at least nine months.”

She said her company was committed to supplying safe products on the market.

“Since the beginning of the year, our Chompkins potato chips have performed exceptionally well, which is a result of investment behind our brands, distribution and continuously increasing capacity in the factories,” she said.

The potato chips space has an estimated demand of 250 tonnes per month with Cold Chain supplying about 140 tonnes.

Lays and Simba are part of the multi-billion dollar company, PepsiCo.

Sources said Simba South Africa, a subsidiary of PepsiCo, was unhappy with the recent developments (SI 64) which came at a time when the Zimbabwe government was encouraging investment into the country.

“It is not cost-effective to set up shop in Zimbabwe because the return on yields from potatoes would be lower due to the drought which has hit the country badly. The average cost of setting up a manufacturing plant to produce the same level of quality as in South Africa would be $100 million. This is because the plant uses state-of-the-art machinery that only employs six people,” the source said.

“Also, it is going to take long to set up as you are going to need a tonne of approvals from the ministry of Agriculture. For a company such as PepsiCo, it is about huge volumes. The ease of doing business in Zimbabwe is not conducive.”

A snap survey from a number of OK Zimbabwe, TM Pick n’ Pay and Spar stores found that a majority of consumers preferred the Lays and Simba brands because of perceived high quality.

Zim-Kings general manager Bryan Hulbert said only 5% of their business was affected as sales of the Zambian potato crisps brand Yoyo was not its core business.

“Of course, if the Yoyo brand contributed more to our business, we would have been affected. However, detergents are our core business and the Ministry of Industry and Commerce has been very helpful to us. This has been due to an investment we made in 2014 of $50 million into setting up a local plant that will supply our imported detergents to the market locally,” Hulbert said.

The import regulations have also put hundreds of vendors who were selling the 23 gramme packets of crispy chips across the country out of jobs.

Consumer Council of Zimbabwe deputy executive director Rose Mpofu said consumers only cared about three things —price, quality and safety.

“Consumers want quality, whether it is local or imported, and they also want low prices. Obviously, there will be other issues but quality in regards to safety as well as low pricing is what consumers want. We do not want shortages, we want to have the product in the market and when those products are on the market, we want the proper quality and price,” Mpofu said.

“We do not want producers to be taking advantage of us as consumers by starting to hike prices and by not producing the proper quantity or quality.”

In the bottled water sector, South African brands such as Aquelle and Valpre are also disappearing from the market due to import restrictions.

Confederation of Zimbabwe Retailers (CZR) president Denford Mutashu said there had been a shift to local product consumption lately.

“We as CZR would have to look into whether distribution companies are being pushed out by local players,” Mutashu said.

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