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Chibuku lifts Delta as Lager sales decline
16/10/2013 00:00:00
by Business Day
 
 
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LISTED brewer Delta Corporation said in a trading update on Wednesday it had seen a marginal rise in revenue in the second quarter of its financial year ended September, largely driven by sales of its sorghum-based Chibuku beer.

Quarterly revenue rose 3% compared with the September quarter the previous year, and 5% for the six months ended September from the corresponding period last year.

Delta did not provide monetary figures in Wednesday’s trading update, only percentage changes in sales. It will publish its financial results on November 14.

The company’s sales reflected a slowdown in Zimbabwe’s economy, with volumes for Chibuku rising while lager beer sales volumes declined, independent economist Moses Moyo said on Wednesday.

"Disposable incomes are declining and the cost of living is rising and this has an impact on Delta’s revenue from lager beer,” said Moyo.

“The company’s product mix has always provided for cover; in the event of a decline in lager beer, Chibuku, which is much aimed at the lower end of the market, will provide some respite."

Delta controls nearly 90% of the lager beer market in Zimbabwe although it is now facing increasing competition from imported beer brands and spirits.

Its soft drinks unit has also had to put up with rising distribution of imported beverages such as Pepsi and 7 Up, which are being distributed mostly from Zambia.

The company said Zimbabwe’s economy continued to be characterised by weak consumer demand. The Consumer Council of Zimbabwe (CCZ) said on Wednesday that the cost of living for a family of six had marginally increased to $567.

"Consumer demand has remained generally soft, a trend that has been evident since the beginning of the calendar year," Delta said in its trading statement.

"The overall financial performance for the quarter and the half-year is in line with our expectations," the company said.

The update showed beverage volumes across the company’s product mix rose 4% for both the quarter and half-year period to end September.

Delta, which did not provide figures for both sales volumes and revenue for its latest update, is due to present its half-year results next month.

"Lager beer has continued to decline and is down 12% to prior year for the quarter and 10% for the six months."

The company received a sales volumes boost from its Chibuku brand, which has now been expanded to several other African countries. It said its sorghum beer had "registered a growth of 13% for the quarter" and about 9% for the half year.



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The rise was driven by the Chibuku Super variation, which has a 21-day shelf life. Delta also said that consumers had started moving "to value product offerings".

The non-alcoholic beverages segment also drove overall volumes for the company, with sparkling beverages increasing 4% for the quarter to end September and 8% for the half-year period.

The opaque sorghum-based but non-alcoholic traditional beverage, Maheu, recorded the biggest increase in volumes after jumping 42% over the prior year quarter and 57% over the previous corresponding half year period.

Revenue from sorghum brews, which comprised 60% of sales in Delta’s beer category in the year ended March, rose 9% in the six months ended September 30 from a year earlier.

Sales of sparkling beverages climbed 8% in the first half, Delta said.


 
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