Resumption of social activities after restrictions benefit Delta

29 Jul, 2022 - 00:07 0 Views
Resumption of social activities after restrictions benefit Delta A new Chibuku Super plant is being installed at Harare brewery for commissioning in early 2023

The Herald

Business Reporter

BEVERAGES giant, Delta Corporation, says its sorghum beer segment in Zimbabwe is benefiting from increased social activities following the relaxation of Covid-19 restrictions, which has allowed movement of people.

Delta, which is celebrating its 60th anniversary, said the resumption of social gatherings which were banned as part of measures to contain Covid 19, had subsequently resulted in a 14 percent growth in volumes for the first quarter to June 30, 2022.

“The sorghum beer volume in Zimbabwe grew by 14 percent for the quarter compared to the previous year, driven by the standard Chibuku (Scud) product.

“The category continues to benefit from the increased social activities as we celebrate the Chibuku brand’s 60th anniversary,” said Delta in a trading update for the quarter.

Consumer spending in Zimbabwe remains high reflecting faster velocity of the local currency, spurred by increased mining activity, infrastructure projects, marketing of commercial crops and payments of wages and salaries in foreign currency.

But demand is however being constrained by declining disposable incomes in certain consumer groups, as inflation takes its toll on workers earnings.

Chibuku Super is, however, being constrained by the limited production capacity. To offset the challenge a new Chibuku Super plant is being installed at Harare brewery for commissioning in early 2023, according to the group.

The beverages group also indicated that it had renewed focus on expanding the consumer choice.

The Chibuku Super Banana flavour was launched in June 2022 and is “exciting the market.”

United National Breweries South Africa recorded a volume growth of 13 percent for the quarter despite the setbacks from the adverse weather in some markets.

Said Delta: “Progress is being made in accessing additional market channels, new products and pack innovations and winning consumers from home brews.”

At Natbrew Zambia, volumes remained under pressure, declining by 9 percent for the quarter, in the aftermath of the price increases implemented in January 2022 in response to the hike in excise duty.

Delta says there are signs of recovery in that market, which will be assisted by the broadening of the product offering, revamping of the route to market and exports of Chibuku Super into the region.

Other segments- lager beer volume grew by 19 percent for the quarter compared to prior year on the back of improved supply of brands and packs which has benefited from the injection of returnable glass.

The segment has experienced intermittent supply gaps arising from the limited packaging capacity ahead of the installation of a new plant in early 2023.

The recently launched Sable lager has brought excitement to the market given its “smooth taste and easy drinking credentials.”

The sparkling beverages volume grew by 32 percent for the quarter and continues to recover market share as the category has benefited from consistent product supply and an expanded pack and flavour offering.

Volumes at wine and spirits maker, Afdis jumped 18 percent for the quarter. According to the group, the supply of ciders has since stabilised, after the outage of glass bottles in the last quarter and the business continues to benefit from the local production of some key brands.

At associate Schweppes  volume grew 9 percent for the quarter, which was constrained by a shortage of fruit juices for the flagship Mazoe Orange Crush.

The local supply of fruit juices has resumed as the harvesting season commenced in June 2022.

In terms of financial performance, the group revenue grew by 55 percent for the quarter in inflation adjusted terms compared to growth of 283 percent in historical cost terms reflective of the volume growth and the replacement cost-based pricing.

Going forward, the business remains upbeat although the disparities in the exchange rate prevailing in Zimbabwe and lack of clarity in the legislation relating to currency payment of certain taxes creates significant uncertainties and business risks.

“The business remains poised to exploit opportunities from activities that generate aggregate demand such as the infrastructure development projects, mining activities and diaspora remittances,” said Delta.

 

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