DELTA Beverages has urged retailers of its products to reduce their prices and be at par with its price recommendations as they are based on generous profit margins.
The company slashed clear beer prices in December 2014 ahead of a quid pro quo agreement with the government to reduce prices while excise duty would be cut from 45% to 40% effective January 1 2015.
This agreement was aimed at increasing volume sales and subsequently excise duty returns to benefit the economy.
Delta Beverages company secretary Alex Makamure told Southern Eye Business that the price changes were supported by extensive media campaigns aimed at educating consumers on the new price levels and urging traders to charge the recommended prices.
“As part of the ongoing awareness campaigns, we will be imprinting the recommended prices on some of the beer labels. We continue to impress upon our partners to charge prices at or below the recommended levels as these are based on very generous margins or mark ups,” Makamure said.
The country’s largest beverage manufacturer’s recommended retail price for beer pints and quarts stands at $0,90 and $1,55 per unit respectively.
However, a snap survey by Southern Eye Business in Bulawayo revealed that only bottle stores and supermarkets had adjusted their prices in line with the new wholesale charges while outlets such as nightclubs, beer halls, pubs and bars maintained pre-adjustment charges.
Makamure said notable cases of overcharging were particularly by on-premise channels such as restaurants, clubs and sports bars that traditionally set prices depending on their clientele.
On-premise channels are outlets where customers can consume alcoholic beverages within the merchant’s buildings.
“It is observed that most of our customers, particularly the formal off-premise outlets such as supermarkets are by and large charging the recommended prices,” Makamure said.
Despite stating the trends in business, he noted that Delta was confined to recommend prices only as any efforts to enforce the same would be in breach of competition laws.
“Consumers wishing to extend their buying power are therefore encouraged to purchase their choice beverages at outlets that charge the recommended prices.”
Consumer Council of Zimbabwe manager for Matabeleland, Comfort Muchekeza, agreed with Makamure and blamed business for failing to diffuse benefits from price reductions to consumers.
“At times the profit margins gained by retailers are not fair because to the ordinary consumer, such reductions are only on paper.
This is irrespective of the fact that now change is not a problem with the introduction of bond coins, which make even nominal reductions possible,” Muchekeza said.
Muchekeza said competition laws were at times abused by retailers because they could self-regulate in their sectors and come up with price ceilings for products through their own associations.
“It only becomes an issue when government comes in to regulate and sets prices.”
Reserve Bank of Zimbabwe governor John Mangudya, in his 2015 monetary policy statement, blamed business for sabotaging efforts to address the overvalued pricing system in the country by operating in bad faith to profiteer.