Delta risks losing monopoly…as govt cracks whip

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Delta Beverages has announced that their products will be sold in United States dollars with effect from Friday.
Delta Beverages has announced that their products will be sold in United States dollars with effect from Friday.

GOVERNMENT is set to deploy its full might on Zimbabwe’s largest beverage manufacturer, Delta Beverages, if it does not reverse its decision to sell products in United States dollars.

This includes lifting import restrictions which protected the company from cheaper external products as well as adjusting tax, a top government official told the Mail & Telegraph.

The highly placed official said in truth the gloves were off after the beverages giant announced that from January 4 all beverages will be charged in United States dollars in a move to secure its US$600 million investment in the country.

“Government will not hesitate to remove or reduce tariffs and non-tariff barriers, such as licensing rules, quotas and other requirements which will allow foreign products to land at a cheaper cost than is being sold by Delta,” the official who requested anonymity because they do not have authority to speak to the media said.

“Government is also prepared to use its regulatory authority to deal with monopolies including tax adjustments and assist competitors prepared to follow the rules.”

Our source’s submissions resonated with an editorial in the state media which labels the move by Delta’s political.

“So extreme is the Delta move that some will wonder if the company’s directors do not have other motives — including political motives. A beer monopoly is a powerful instrument, and perhaps Delta’s directors think this can be used for other ends, but in any case it does not matter,” read part of the editorial.

The state media added that Delta is a local company “whose inputs are made and paid for locally: grains, sugar, water, electricity, fuel for its vehicles, services, taxes, salaries and wages it pays for its staff” with its imports are limited to flavourings and thus does not need 100 percent foreign currency for its products.

This comes as Government has called for a meeting with Delta’s top brass to persuade them to rescind the decision before government acts.

In a statement dated January 2 2019, Delta  Beverages said the company was struggling to meet orders because of foreign currency shortages.

 “In order to sustain its operations, the Company advises the retail and wholesale customers that its products will be charged in hard currency with effect from Friday 4th January 2019. It is noted that:

“Our products are fairly priced in USD and have remained largely unchanged since 2013.

“The Company has invested in excess of US$600 million in plant and equipment, vehicles and ancillary services since 2009. There is need to protect this investment and ensure sustenance of all value chain partners.

“The prices of local materials and services have escalated both in USD and in RTGS (ostensibly in response to the foreign currency exchange rates).

“The company does not trade on the parallel or black market and does not subscribe to any exchange rate between the USD and the RTGS or Bond Notes, as they are not currencies,” Delta Beverages said.

The company called for policy interventions so as to build market confidence.

“There is need for wider consultation on policy interventions to build consensus and market confidence among stakeholders to stabilise the macroeconomic environment.

 “..Our business has been adversely affected by the prevailing shortages of foreign currency, resulting in the company failing to meet your orders and in the case of soft drinks, being out of stock for prolonged periods.

Industry and Commerce Minister Mangaliso Ndlovu has said Delta’s decision, “cannot be allowed” and has called a make-or-break meeting with the beverages giant tomorrow