…Porous Forbes Border Post impedes growth of Mutare’s manufacturing industry
MUTARE’s sole opaque beer brewery, Pungwe Breweries and Marketing Pvt (Ltd) is on a recovery path now operating at 74.8 percent production capacity from a low production capacity of 6.6 percent in 2010.
In a recent interview with Eastern Times Business the general manager Ms Shupikai Chikuruwo revealed that the concern wholly owned by Mutare City Council but privately run, was on a cumulative recovery path since 2015 after years of posting losses and nearly shutting down its operations.
“Since the beginning of 2015 there has been visible growth in our production capacity. We were at 17 percent production capacity beginning of 2015 producing about 16 brews of which each brew is 11 000 litres (176 000 litres). By December 2015 we were at 46 brews and by end of last year we were at 68 brews, which is 74.8 percent production capacity. From six brews in 2010 this is a great upshot,” said Ms Chikuruwo.
Pungwe Breweries brews the Pungwe Shake Shake and the Kariba Mhamba opaque beer brands.
Ms Chikuruwo said from a declining market domination in 2009 of just distributing in Chigodora, Mutare urban and Chipinge, they have since expanded distribution to cover the whole of Manicaland in Murambinda, Rusape, Honde, Hauna, Chimanimani, Chipinge and Checheche, whilst outside the province they are now selling in Masvingo, Harare, Hwedza, Gutu, Chivhu and Chiredzi.
“After dollarization in 2009 we failed to quickly adjust but in 2014 we rebranded with our old Kariba Mhamba brand, which was previously our brand name before we privatised in 1997, changing our brand name to Pungwe.
With a workforce of 48 employees including those in administration, production and distribution departments, the brewery is using the lean concept of cutting cost leakages at all levels of production to maximise production.
Ms Chikuruwo said she was targeting 78 brews by December 2017, which is about 85 percent production capacity. She however said full recovery was pinned on a lot of macroeconomic factors as well as increased efforts by Government to control the porous Forbes Border Post where a lot of cheap illicit brews are making inroads into the country duty free.
Bulawayo’s Ingwebu Brewery and Pungwe are the only council breweries left following the closure of Kwekwe’s Simba Brewery last year and Gweru’s Go Beer three years ago.
Pungwe Breweries posted a turnover of US$233 000 in December 2016 from US$66 000 the year before.
Whilst on the local front competitors like the Delta Beverages sorghum opaque beer Chibuku, continue to be a huge threat, Ms Chikuruwo said the biggest hurdle was the uncontrollable and unforeseeable macroeconomic challenges that were making it difficult for industry to strategically plan on recapitalisation efforts.
“Although business is improving it is very difficult to plan ahead with our current macroeconomic hurdles, for instance we need about $1.2 million to recapitalise, but we fear the uncontrollable competition of porous borders and illicit brews being smuggled in the country, which affect sales volumes drastically regardless of having state of the art machinery. So for now our priority is focused on paying creditors. From over $1059 million owed to creditors, we have managed to pay over $358 000 since last year,” she said.
The issue of porous borders has become a contentious issue for several companies in the local manufacturing sector as cheap smuggled imports continue to flood the market at uncompetitive prices.
Almost each week bales of second hand clothes or truckloads of Coca Cola soft drinks smuggled from Mozambique are being apprehended in Mutare, whilst smugglers of illicit brews are being arrested almost on a daily basis.
Pungwe Breweries joins the list of the few local companies based in Nyakamete Industrial area that are on a recovery path, like agro-processors, Cairns Holdings, which came out of judicial management in 2015 after going under the court-supervised rescue plan in 2012 and the forestry and wood-processing concern, Border Timbers Limited, which also came out of judicial management last year.
During the heydays in the 1990s when these companies were operating at full throttle, thousands were decently employed, with the Nyakamete Industrial area full of activity, unlike present-day. The closure of big companies like Mutare Board and Paper Mill, Karina Textiles, Dairiboard Mutare branch, PG Safety Glass, Cotton Company of Zimbabwe Mutare branch and Zimbabwe Coffee to mention a few, saw the demise of the once industrious Nyakamete Industrial area.
However, with new industry like frozen and dry foods distributor Mega Market and the cooking oil and soap manufacturing company, Willowton Zimbabwe, industrial activity is now improving in Nyakamete.
Ms Chikuruwo added that liquidity constraints in the country were now threatening recapitalisation efforts by local industry as most large-scale companies are currently failing to access foreign currency on time to import raw materials and meet production targets, due to the Reserve Bank of Zimbabwe foreign exchange priority list.
In an effort to promote efficient utilization of foreign exchange and to reorient import demand towards productive uses, RBZ last year came up with a foreign exchange priority list.