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Delta Corporation says lager beer volumes down
14/04/2015 00:00:00
by The Source
Zim’s largest company, Delta to retrench

DELTA Corporation said on Tuesday its annual lager beer sales fell 17 percent, the second consecutive year volumes have tumbled as consumer spending wanes in a shrinking economy.

Zimbabwe's largest listed company, accounting for a third of market capitalisation, said it was also affected by cheaper imports from neighbouring states whose currencies are weakening against the U.S. dollar, the country’s official currency.

"We report a mixed performance across the beverage categories in an environment of a contracting economy," the company said in a trading update for the year-ended March.

Soft drinks volumes fell by 6 percent but sales of sorghum beer grew as consumers shifted to cheaper alternatives.

The company said Chibuku Super now contributes 50 percent of volumes sold.

“The sorghum beer volume is six percent up for the quarter and eight percent above prior year for the full year,” read a trading updated issued Tuesday.

“The supply of Chibuku Super improved during the quarter, with the product attaining a contribution to total volume of about 50% by March 2015.

“The installation of the new production facility at Fairbridge in Bulawayo is on schedule for full commissioning by July 2015.”

Soft drinks volumes, comprising both sparkling and alternative beverages are down five percent and six percent for the quarter and the full year, respectively, the company said.

“Revenue is down five percent for the quarter and six percent for the full year. The full year results will reflect some loss of financial leverage due to the changes in the sales mix and the deliberate strategies to preserve volumes,” said the company.

“This reflects a deceleration in the rate of decline compared to the preceding nine months. The price reductions implemented at the beginning of January 2015 have improved the affordability of our brands and should, over time, stem the volume decline.”

Delta is 38 percent owned by global brewing giant SABMiller and will publish its full-year results on May 14.

The government forecasts growth this year of 3.2 percent, but analysts say weak commodity prices, patchy rainfall this season and company closures as a result of cheap imports and high interest rates will curtail the economy's growth.


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