HomeBusiness DigestDelta lager beer sales plunge 57%

Delta lager beer sales plunge 57%

BEER-IMBIBING Zimbabweans were forced to forego their favourate drinks in the quarter to June 30 as inflation eroded incomes, latest numbers show.

By Kudzai Kuwaza

Zimbabwe Stock Exchange-listed beverage and booze maker — Delta Corporation Ltd — says lager beer sales volumes fell by 57% owing to affordability issues.

In a trading update for the first quarter ended June 30 2019, Delta reported that its lager beer volumes plunged 57%.

Its sparkling beverages division suffered a 79% sales volumes decline in sparkling beverage volumes in the same period.

It was not bad news all round for the group. The company witnessed a marginal increase in sorghum beer sales volumes in the same period.

“Lager beer volume declined by 57% compared to prior year for the quarter. Demand was subdued on account of affordability issues as market players adopted varied pricing models,” Delta said in its statement.

“The Sorghum beer volumes grew by 2% versus prior year for the quarter. Product supply has been consistent despite the difficulties in accessing imported packaging materials and services. There are concerns about the supply of agricultural cereals arising from the drought and the recent changes to the marketing policies.”

This was due to an extended period of shut down caused by shortages of imported raw materials. However, the group has resumed full production.

“The fundamental changes in the economy arising from the recent fiscal and monetary policies have significantly affected the business. The availability of foreign currency remains a challenge, disrupting imported supplies into the value chain,” Delta said in its statement. “Our product prices have not yet factored in the full impact of the depreciation of the exchange rate. Foreign suppliers remain cautious about Zimbabwe country risk thus compromising the smooth flow of imported materials.”

The group revenue, which includes African Distillers (Afdis), will, however, reflect a 92% increase for the quarter and it is noteworthy that the comparative figures were reported in United States dollars.

Delta reiterated its cautionary statement advising of the impending termination of the bottlers’ agreement with the Coca-Cola Company. “Shareholders are reminded that the company is trading under a cautionary issued with respect to the notice received from the Coca-Cola Company (TCCC) advising of an intention to terminate the Bottlers’ Agreements with the group entities,” Delta said.

“This followed the merger of AB Inbev and SABMiller Plc in October 2016 and the subsequent agreement in principle reached between TCCC and AB InBev to explore options to restructure the bottling operations in a number of countries. The ongoing discussions among the parties are slower than anticipated in light of the significant changes in the macro-economic factors in Zimbabwe.”

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