Schweppes Zimbabwe will no longer receive concentrates for its famous cordial drink, Mazoe Orange crush. This comes after the Coca Cola Company cut off supplies to Schweppes due to failure to repay debt amounting to US$10 million.
The beverage maker halted production of the cordial drink 3 weeks ago. Mazoe is a Coca Cola product produced by Schweppes under a franchise license.
The signature concentrate has been a Zimbabwean favorite since 1930. Named after the orange growing valley in Mazowe, the drink is a special blend of secret ingredients and contains the highest level of orange concentrate in all of Southern Africa.
The US$10 million owed is legacy debt that has been accruing for over 3 years. Due to the unavailability of foreign currency, Schweppes has failed to honor this debt.
Since the introduction of a local currency, it has become increasingly difficult to access foreign currency from banks. Although the Reserve Bank of Zimbabwe promised to assist local companies settle their legacy debts, this aid will only be available in 2020.
In the meantime businesses need to find ways of servicing these obligations on their own. Schweppes is just but one of the many local companies facing foreign debt issues.
Currency reforms made by government in the past year have made it difficult for businesses to access foreign currency through legal means. Often businesses buy foreign currency from black market traders at very high premiums which are unprofitable. Hence most have defaulted on their international debt obligations.
Foreign investors on the other hand, are now reluctant to invest in Zimbabwe as they view the country as very high risk. Most suppliers now demand that Zimbabwean businesses pay upfront before delivery of raw materials is made.
It thus makes it extremely difficult to conduct business with some resorting to closing shop.