CTC turns down Varum Beverages request to ban energy drinks importation

Competition regulator Competition and Tariff Commission (CTC) has reportedly poured cold water on a request by Varun Beverages, the bottlers of Pepsi in Zimbabwe, to limit imported energy drinks.

Imports of energy drinks have risen by more than 7000% since 2019, as shown by to data from the Zimbabwe Statistics Agency (ZimStat).

Varun, which supplies the Sting energy drink, approached CTC in May this year urging it to impose restrictions on such imports.

However, CTC says there is no threat posed to local companies.

“The (Varun) request was to ban imports of energy drinks into the country.

“As alleged, Zimbabwe imports energy drinks from Zambia and South Africa using SADC preferential rates and/or COMESA,” CTC pointed out in its latest quarterly report.

“It (CTC) undertook a preliminary inquiry to determine whether the alleged increased importation of energy drinks constitutes an unfair trade practice consistent with the Competition Act that could warrant launching of investigations.”

Zambian company under the Trade Kings group, has increased supplies of its Mojo and Wild Cat energy drinks brands into Zimbabwe.

The company is targeting the same market segment that Varun’s Sting is servicing.

ZimStat trade data show that Zimbabwe’s imports of energy drinks rose from 416 528 to 29 869 862 units between 2019 and 2022.

In response, in the 2022 budget, Finance Minister Mthuli Ncube imposed a tax of 5 US cents for every litre of energy drink imported into the country.

As stated by CTC, “traditional trade defence tools” such as import prohibitions, quotas, and tariff hikes violate trade agreements under Southern African Development Community and Common Market for Eastern and Southern Africa.

“Assessment of the facts established that there was no possibility of dumping or subsidization as the imported product prices are higher than the local prices.

“It therefore follows that anti-dumping duties and countervailing measures cannot be applied in the case under consideration.”

There was no evidence “to prove injury to the local industry,” CTC concluded.

Zwnews