Delta invests in Chibuku plant

ZIMBABWE’S largest beverage manufacturer Delta Corporation (Delta)’s sorghum beer division, Chibuku plans to invest more than US$6,5 million in a new plant in the coming year to meet growing demand for the product, management said.

Taurai Mangudhla

A US$6,5 million carbonated sorghum beer plant was commissioned this year and has capacity to contribute US$10 million in annual revenues at current production rate of one million litres beer, which is packed into one litre PET a, per month.

Chibuku general manager Mark Mudimbu says the current capacity appears to be short of market demand after registering more than 60% capacity utilisation in the first three months of operation.

“We have not yet satisfied the market so we need to do this as soon as we can. We have been operating for three months and we are now beginning to feel the need to invest in extra capacity,” Mudimbu said, adding the new investment is likely to be more than the US$6,5 million.

“I don’t want to give exact dates and figures, but the best thing I can do is to tell you what we are planning. It’s a process and you know what happens when you are in business, you have a plan, which has to be approved and funds made available thereafter you can come up with specific targets,” he said.

Mudimu said the new Chibuku Super plant has produced three million litres of, which is packed into one litre bottles using latest technology acquired from Germany.

“Although we are not yet at full capacity, there is still capacity that we still have to utilise, but when coming from zero, then you are utilising more than 60% in three months you need to be thinking of something,” he said.

So far, Chibuku has 15 breweries in the country with distribution in three cities of Bulawayo, Harare and Mutare.

The company is more flexible in terms of distribution because of the carbonated Chibuku’s 21 day shelf life compared to the regular Chibuku which has a three day shelf life.

Chibuku’s planned investment is in line with Delta’s anticipation of a massive share price growth in the full trading year to March 2014 buoyed by solid investments made in plant and equipment.

The share price growth, Delta said, is also coupled with production volumes growth.

Last year alone, Delta spent US$85 million, a figure representing 50% of Ebitda and is targeting to spend 30% of Ebitda as capex in the current financial year.

Delta also plans to invest in a new Maheu plant expected to at least double production to meet growing demand for the product, company CEO Pearson Gowero said.

At an investment conference held in the country last month, Gowere said that Delta’s share price was on an upward growth trajectory as the group continues to reap benefits from its huge capital investments made since the country adopted a multi-currency regime in 2009.

At the same event, Delta FD Matts Valela said the group was also looking at growing its business from the opportunities coming from growth in mining and agriculture.