Delta Beverages volumes plunge

BY TAFADZWA MHLANGA

Listed beverages brewer, Delta Corporation Limited (Delta) has reported a 48% tumble in lager beer volumes during the half year period ending September 2019, as the bluechip company continues to feel the pinch of the economic crisis obtaining in the country.

Furthermore, sorghum beer volumes in Zimbabwe fell by 29% for the quarter and 15% for the six months to September as consumers switched from its products due to the rise of major input prices, leading to sharp increases of beer prices.

Sparkling beverages volumes also plunged by 36% for the quarter and 56% for the half year.

In a trading update released yesterday, the beverage manufacturer said that it had to moderate prices to maintain the affordability of their products.

“Lager beer volume declined 40% for the quarter and 48% for the six months compared to the same period last year.

“The company had to implement modest, but frequent price increases in response to the inflationary pressures while taking into account the affordability issues affecting the consumers.

The pricing has been moderated to maintain affordability given the prevailing economic challenges,” company secretary Alex Makamure said.

Delta says it is struggling to source raw materials and services due to the unstable performance by the interbank market and that foreign suppliers were reluctant because the company still owes them some money.

“There are still challenges in sourcing imported raw materials and services due to the mixed performance of the interbank market and difficulties in accessing materials as foreign suppliers remain jittery on account of overdue payables,” Makamure added.

At Natbrew Zambia, volumes declined by 13% due to input price increases and the devaluing of the country’s currency, kwacha.

Schweppes Holdings struggled to access raw materials, resulting in a 33% decline in volumes during the six months to September.

African Distillers recorded a soft volume outturn due to limitations in accessing and high cost of foreign currency.

Economist Persistence Gwanyanya said the decline in Delta volumes shows that the country’s economy is contracting and that the national income is also decreasing.

“The decline is mainly due to the liquidity challenges in the economy. The money supply is very low in terms of foreign currency, leading to the increase of the beer prices. The circulation of money is reducing and salaries have not increased either. The capacity for the ordinary person to purchase beer is slowly reducing,” Gwanyanya said.

“The decline in volumes reflects the reality of the Zimbabwean economy, that it is contracting. It speaks volumes of the performance of the economy. There are very few drivers in the economy, leading to a drop in real personal income, industrial production and retail sales. The national income is going down,” he added.

Another economist, Christopher Mugaga concurred, pointing out that the bluechip company’s performance speaks volumes about the shrinking of earnings, pushing citizens to go for cheaper products.

“The 40% decline reflects how companies are struggling in this economic environment and this environment is not good for business. Delta reflects the country’s economy and it should be protected. We do not want it to be lagging behind as it is one of the big companies that drive the economy. Delta relies on its consumers and it should be protected,” Mugaga said.

“Private consumption has gone down as people do not have money to spend on beer. Beer has become a luxury in Zimbabwe. People now go for illegal low value products.”

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