BEVERAGE wholesalers and retailers in Zimbabwe have bemoaned restrictive practices by some of the country’s largest manufacturers saying the unfair business practices, apart from constraining viability, weigh on the sector’s contribution towards the attainment of the Government’s Vision 2030.
Players in the sector said the upper middle-income society could only be attained if all facets of the economy grow harmoniously including through reasonable and equal distribution of incomes.
At a time when Zimbabwe is journeying towards the target of Vision 2030, players in the sector claimed some of the unfair practices by market leaders restricted the growth of beverage retailers and wholesalers while in the worst case scenarios, this pushed operators out of business.
Some of the industry players said the restrictive practices included demands by the manufacturers for certain onerous collateral for large orders without guaranteeing adequate supply of all required brands for operators to drive volumes to get enough revenue and profits to settle their liabilities in time.
The Herald Finance & Business is reliably informed that some of the dominant beverage makers (names withheld) practise what the Competition and Tariff Commission recently termed “tied selling”, which is illegal, where customers are required to take certain brands they may not need, to get orders.
Profiteering tendencies
A couple of months ago, the producers increased prices markedly under the pretext of new taxes introduced in the 2024 national budget, which operators feel go beyond incorporating the cost effect of some of the budget measures, reflecting profiteering tendencies from dominant industry players.
“All of a sudden we were told prices had been significantly increased because of taxes introduced by the Government in the 2024 national budget, but we wonder whether the taxes are remitted to the relevant authorities,” said a retailer who operates in Harare.
Viability challenges associated with some of the unfair practices have pushed some traders out of business while others failed to settle their accounts on time and lost their pledged security.
Besides, some of the manufacturers also undertake door-to-door distribution squeezing the wholesalers out of business and restrict distribution agreement which we believe to be commercial.
This has pushed back progress made to empower locals in the sector, as incomes among the indigenous players have been extensively squeezed.
Some of the major operators have also significantly cut commissions previously available to wholesalers, further impacting on viability of operators as their operations costs remain unchanged.
The Ministry of Industry and Commerce recently highlighted the threats posed by dominant manufacturers including bypassing wholesalers and selling directly to retailers posed to the sector and employment creation.
Distribution agreements
Beverage Wholesalers and Retailers Association of Zimbabwe president Dr Petros Isaac Kanjera said “Other restrictions are centred on manufacturers refusing to enter into distribution agreements for more wholesales to be opened, thereby making the supply chain irrational.
“As an association we are business partners and our role is to enhance the business processes between the producer and the final consumer.
“We must have more wholesalers to bring the producers; products nearer to the market. Right now you see a lot of queues at some of the manufacturers; depots as retailers will spend their precious time waiting to buy the product,” he said.
Dr Kanjera said such an arrangement delays the distribution of the products because in business losing time means losing money and at times the business will fail.
“Despite stringent conditions for key wholesale customers who surrendered security for large orders, some of the producers do not avail products on time and at times the required brands.
“Let the wholesalers do the distribution while manufacturers concentrate on production,” Dr Kanjera said.
If the manufacturers allowed the wholesalers and retailers to interface with final consumers while they stick to production, that could drive job creation, effectiveness and efficiency in the business sector, Dr Kanjera said.
“There is an urgent need to restore the value supply chain to drive the equal distribution of income in the sector, adding, for those wholesalers and retailers that have closed due to these inconveniences, we desire for them to be reopened for economically they will add to the country’s Gross Domestic Product income every year as we are on our journey towards 2030.
“Right now some of the manufacturers are getting all the income for themselves by doing production and distribution to the market.
“We think it would be a good idea if the manufacturers could engage with independent transport companies thereby expressing development in the transport sector.
“Thus suppliers own the product and wholesalers and retailers own the market, that is what it should be,” Dr Kanjera said.
“Many operator’s businesses are going to collapse due to the power and influence of certain manufacturers yet they are benefitting from this country. On the same note, the coming in of new players has resulted in favourable prices in the market thus the concept of supply and demand prevailed.
“More players have brought healthy competition in the beverages sector, which has resulted in lower prices for the consumers. As such, we are encouraging the coming in of more players,” he said.
The BWRAZ will also seek to promote the consumption of safe products by making sure that all products sold in the market have Standards Association of Zimbabwe certification.
“We do not want to put people’s health at risk; having a healthy worker results in good work, and good work results in a good product, and a good product in good production, and again a healthy consumption. For the Vision 2030 can only be achieved by our people being valued per capita of a healthy country both socially and economically,” he said. – Herald
