Delta records 48 % beer consumption decline in the year’s first half

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By Alois Vinga

LISTED beverages giant, Delta Corporation Limited has recorded a 48 % lager beer volume decline in the first half of 2019 owing to the erosion of disposable incomes.

Presenting the trading update for the second quarter and half year ended September 30, 2019, Delta Corporation’s company secretary, Alex Makamure said lager volume performance declined significantly owing to a number of factors.

“Lager beer volume declined 40 % for the second quarter and 48% for the six months compared to the same period last year.

“The Sorghum beer volume in Zimbabwe declined 29% for the quarter and 15% for the six months. The prices of the major inputs; maize, sorghum and packaging materials rose ahead of disposable incomes,” he said.

The beverage company admitted the increase in alcohol prices as a factor which pushed the products’ affordability beyond reach of customers but maintained the increments were only moderate and prompted by rising raw material costs.

“The pricing of this category has been moderated to maintain affordability given the prevailing economic challenges leading to sharper price increases which have resulted in some consumers switching from the category,” Makamure said.

At Natbrew Zambia, the volume was 13% down for the quarter compared to last year which is partly due to higher pricing on the back of a steep increase in maize prices and the depreciation of the Kwacha.

Consumer acceptance of the recently launched returnable pack has been encouraging. Product supply is constrained by capacity and power supply disruptions.

The Sparkling beverages volume declined 36% for the quarter and 56% for the six months. Volume has recovered in the last quarter on the back of improved product supply and moderated retail pricing.

The company however, reported raw material supply remains a challenge as the category has a high import content.

African Distillers (Afdis) recorded a soft volume outturn due to limitations in accessing and the high cost of foreign currency. The entity continues to launch products with a lower foreign currency content.

The beverages volume at Schweppes Holdings also declined by 33% for the half year due to falling consumer demand arising from the pass-through effects of cost push inflation.