DELTA Beverages experienced a series of volume declines, owing to the prevailing economic crisis despite recording a 14% increase in revenue for the year ended December 31, 2019.
In a trading update, company secretary Alex Makamure said hyperinflation, an unstable exchange rate, limited availability of foreign currency in the formal banking channels, drought-induced shortages of cereals used in the brewing processes and shortages of fuel and power disrupted operations and distributions last year.
“The trading environment has remained turbulent due to hyperinflation, an unstable exchange rate, limited availability of foreign currency in the formal banking channels and the drought-induced shortages of cereals used in the brewing processes. The supply of fuel and key utilities such as water and electricity continues to be erratic, thereby disrupting production and distribution operations. The prevalence of multiple exchange rates has distorted operating costs and product pricing. The inflationary environment has impacted negatively on consumer disposable incomes, thereby reducing discretionary household spending,” he said.
Lager beer volume declined by 42% for the full year compared to the same period last year, as there was a prioritisation of returnable bottle packs in an effort to conserve foreign currency and drive affordability.
Sorghum beer volume in Zimbabwe declined by 25% for the full year. The pricing of the category was driven by the escalation in the cost of imported inputs such as packaging and brewing cereals.
At Natbrew Zambia, the volume was 27% for the full year compared to last year. However, there are ongoing measures to reverse the volume loss to other alcoholic beverage categories.
Sparkling beverages volumes declined 17% for the full year. At African Distillers (Afdis), the total volume declined 12% for the quarter. The unit also benefited from a favourable product mix.
The beverages volume at Schweppes Holdings declined by 24% for the quarter due to low consumer demand. However the supply of the Mazoe Orange Crush improved during the quarter following a period of shortages.
The revenue for the fourth quarter grew by 20%, driven by the replacement driven product pricing and a low prior year base. The revenue increased 14% for the full year.
Delta continues to work collaboratively with The Coca-Cola Company to maintain consistent product supply while optimising the value chain and product offerings.
The acquisition of United National Breweries, the leading producer of traditional beer and allied products in South Africa, has been concluded with effect from April 1 2020.