The Sunday News
Munyaradzi Musiiwa Business Correspondent
ZIMBABWE’s largest brewer Delta Beverages is under investigation from the Competition and Tariffs Commission for corporate bullying after small players in the sector complained that the company was deliberately pushing them out of opaque beer business by buying out their returnable beer containers to create artificial shortages.
The affected companies, Ingwebu Breweries based in Bulawayo, Kwekwe Breweries which brews Simba beer and Go-beer Breweries in Gweru, allege that Delta Beverages was in the habit of buying out the three companies’ returnable containers and crates from bottle stores, beer halls, bars and pub operators to create packaging shortages for the small companies.
The two companies sell their opaque beer in two- litre containers at a price of 80 cents for contents and 20 cents for the container deposit.
Delta, as a way of creating shortages, allegedly goes around the outlets buying the two companies’ products and sometimes offered to buy the returnable containers at 40 cents instead of the 20 cents.
The outlets tempted by the offer end up selling the containers to Delta although knowing that they do not belong to them.
The breweries think Delta then stacks the containers to ensure that there are shortages forcing the small companies to source new containers at added cost every time.
CTC acting director Mr Benjamin Chinhengo confirmed that Delta was under investigation and that they were in the process of gathering all the necessary evidence after receiving complaints from the breweries.
“There are investigations that are currently going on where we received complaints from Kwekwe Breweries and Ingwebu,” he said in an interview on Tuesday.
The investigations started last year.
“It can be closed if we do not get enough evidence. Some investigations go up to five years depending on the evidence but if you fail to get evidence we close the matter but when there is evidence we can give an order or a fine. Investigations might take a while because we need to get concrete evidence,” he said.
Delta Beverages company secretary Mr Alex Makamure confirmed that his company was under investigation by the CTC and acknowledged withholding some of the small companies’ crates although he said there was an agreement by sorghum beer brewers to accept the crates on deposit and exchange them with each other.
“The sorghum beer manufacturers have arrangements to accept the crates on deposit and exchange them with each other. This is convenient to both traders and consumers.
“We point out that Go-Beer, and Kwekwe Brewery (Simba) have been previously advised to collect their containers on payment of the requisite deposit values. It is our inference from their inaction that they are cash strapped. We have no reasons to hold on to these containers,” he said.
He said the complaint by these small companies was an abuse of process as it was meant to force Delta to give up containers to them for free.
“If at all there was an issue then this would be dealt with as a civil claim.”
He criticised Bulawayo City Council which controls Ingwebu Breweries noting that the council was not allowing Delta products to be sold in council-owned beerhalls, something which he said the CTC must look into.
“The real impediments to competition in the sector relate to issues of the brewing local authorities not allowing our offerings to be sold in council-owned beer halls, particularly in Bulawayo.”
CTC is a commission set up by Government through an Act of Parliament to regulate tariffs, custom duty and ensure fair competition and trade among players in the same line of business.
The fight in alcoholic business seems to have shifted to sorghum beer after Delta conceded that its lager and sparkling drinks businesses were now under threat as consumers feel the pinch of liquidity problems.
Most of the imbibers are now turning to the sorghum beer because it is affordable.
Since last year, Delta in all its trading updates have recorded reduced volumes for lager beer but an increase in its sorghum beer.
The company, when its lager business was more lucrative, was producing standard Chibuku but scaled down in 2013 when it started brewing Super Chibuku at its Chitungwiza brewery.
The Super Chibuku has gained momentum over the last years and in the last trading update early this month the Zimbabwe Stock Exchange-listed heavyweight said the product was now contributing 50 percent of volumes.
Buoyed by the performance of the new product Delta is now installing an $11 million new plant at Fairbridge in Bulawayo that is set to provide Chibuku Super to the southern region, the same area the complaining companies derive their markets.
The new plant is set to come on line in July this year.
CTC has bemoaned that some of the fines for anti-competitive practices, meanwhile, were no longer deterrent enough to compel some of the big conglomerates to comply with the rules and regulations.
Mr Chinhengo said Government would soon craft a new Consumer Act which also seeks to harmonise the Consumer Act, National Income and Pricing Commission and CTC to plug some of the gaps that were created by the multicurrency system.
“Our marking level is up to 14 and now you discover that the heaviest fine for non-complying companies is only $5 000,” he said.
The fines, he said, were not deterrent enough.
He said, however, on non-procedural mergers or consummating a merger of big companies CTC was mandated to fine 10 percent of the turnover and this was deterrent enough.
“As we are now we are going to start drafting the Act in June and then we will conduct consumer consultative meetings and we hope by next year we will have finished compiling the draft so that it will be presented in Parliament and go through all the processes of policy making.
“We want to amend some of the clauses. The fines are very low and the lowest level has a fine of about $250. There is no incentive for us,” said Mr Chinhengo.
Some of the anti-competitive practices involve collusive tendering, bid rigging, bid rotation and price fixing.
Innscor was recently fined more than $2 million for consummating a merger without following proper CTC procedures.
