HomeBusinessFestive cheer eludes Delta as volumes dip

Festive cheer eludes Delta as volumes dip

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DELTA Corporation Limited recorded volume decline in all its beverage categories except Maheu during the quarter ended December 31 2014 due to the subdued consumer spending during the traditional holiday peak period.

VICTORIA MTOMBA
BUSINESS REPORTER

In the past, Delta used to record an increase in volume during the quarter as Zimbabweans went merry-making in the festive season.

In a trading update, the beverages manufacturer said the environment had remained difficult and revenue was down 10% for the quarter and 6% for the nine-month period.

“The losses in economies of scale and the changes in the sales mix will have a bearing on the financial performance,” the group said.

The group said lager beer volumes were 9% below the prior year for the quarter and down 20% for the nine months indicating some slowdown in the rate of decline compared to the preceding quarter.

Sparkling and alternative beverages were down 5% for the quarter and 6% below the prior year for the nine months.

“There was an undersupply of the Chibuku Super account because of constrained brewing capacity outages. Additional capacity is expected to come by mid-year 2015,” the group said.

The beverage manufacturer said sorghum beer volume was down 1% for the quarter and 8% above the prior year for the nine months.

“The Maheu and dairy mix beverages recorded a growth of 8% in the quarter,” the group said.

Delta Corporation launched the Maheu brands in 2012 after they had been importing the non-carbonated, non-alcoholic beverage from an associate company in Zambia. The plant was set up for $4 million and Maheu has been on a growth trajectory since its launch.

Retailers are facing subdued demand for their products due to consumers’ low disposable incomes and a worsening economic environment that has spawned company closures and retrenchments.

Delta has responded to low consumer demand by reducing prices to stimulate demand.

In September, Delta reduced the price of quarts to $1,60 from $1,75. The price of Eagle quarts was reduced to $1 from $1,20.

The price of Magnum 660ml for Golden Pilsener, Zambezi Lager and Bohlingers were reduced to $1, 75 from $1,80.

Early this month, Delta reduced the price of beer to reflect the reduction in excise duty to 40% from 45% of the producer price.

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