HomeLocal NewsDelta weathers the storm, sees revenues climb 77%

Delta weathers the storm, sees revenues climb 77%

Tatira Zwinoira

DELTA Corporation Limited revenue grew 77% in the third quarter and 33% for the first nine months of 2020 owing to an overall improvement in volumes.

In a trading update for the period under review, released on Wednesday, Delta company secretary Alex Makamure said the group witnessed volume recoveries across its different products.

“Group revenue grew by 77% for the quarter and 33% for the year to date in inflation adjusted terms and by 784% and 837% in historical cost terms for the quarter and year-to-date, respectively,” Makamure said. “This reflects the significant volume recovery across all beverage categories and attention to replacement cost based pricing.”

In Delta’s lager beer segment, volumes grew 48% for the quarter and 20% for the nine months compared to the same period last year. The company stated that the volume recovery is attributed to the competitive pricing and consistent product supply, benefiting from the injection of new returnable glass bottles and fewer disruptions to production operations.

“In Zimbabwe, the sorghum beer volume grew 29% for the quarter but still trailed prior year by 14% for the nine months. There was improved market access following the relaxation of the lockdown measures during the quarter. The sorghum beer category was negatively impacted by limited access to trade channels such as bottle stores and rural markets in the first half of the year,” he said. “The volume at Natbrew Zambia declined by 2% for the quarter and is up 5% for the nine months. The category has witnessed the resurgence of illegal trading in bulk beer which trades at a discount to packaged products.”

However, the South African entity, United National Breweries, recorded a year-on-year decline of 19% for the quarter as the country implemented a ban on the sale and consumption of alcohol.

“The total ban on alcohol sales was re-imposed at the end of December 2020. Sparkling beverages volumes grew by 66% for the quarter and is up 42% for the nine months compared to prior year. The category has benefited from consistent product supply and competitive pricing,” Makamure said. “The sales mix has shifted towards take-home packs in response to the restrictions on gatherings. African Distillers (Afdis) registered volume growth of 37% for the quarter and 25% for the nine months driven by the spirits and ready-to-drink ciders.”

Delta reported that the beverages volume at Schweppes Holdings recovered and registered growth of 24% for the quarter but is down 2% for the nine months.

Makamure said the recovery is premised on improved product supply and the re-launch of Minute Maid.

While there was an overall volume recovery growth for the period under review, Delta stated that the trading environment remained challenging.

“The trading environment during the period under review was largely influenced by the restrictions to human and economic activity implemented by authorities in response to the Covid-19 pandemic,” he said.

“In Zimbabwe, Zambia and South Africa, the lockdown measures were partially eased during the quarter to 31 December 2020, allowing for increased business activity albeit with some restrictions on social gatherings and targeted measures limiting the sale or consumption of alcoholic beverages.”

Delta operates in Zambia through National Breweries Plc and in South Africa through United National Breweries. The former produces, packages and markets traditional sorghum beer products in Zambia while the latter manufactures traditional sorghum beer in South Africa.

In an outlook, Makamure said the business outturn for the fourth quarter would be subdued owing to re-imposed Covid-19 restrictive measures in Zimbabwe, Zambia and South Africa.

He said the Zimbabwean economy could benefit from improved access to foreign currency and lower inflation, which in turn could improve demand for Delta products.

“The company will continue placing safety and health of its employees first and abiding by best practice as pronounced by the authorities whilst seeking to keep the company and group entities afloat in the circumstance of this Covid-19 pandemic,” he said.

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