BY FIDELITY MHLANGA
ZIMBABWE Stock Exchange-listed beverages producer, Delta Corporation has continued to sing the blues with trading volumes of almost all products taking a plunge in the nine months ended December 2019, as a result of consumers’ poor disposable incomes, power and fuel shortages.
Zimbabwe is experiencing its worst economic crisis in a decade, with biting shortages of foreign currency, grain, and fuel and rolling power cuts that last up to 18 hours. The shortages have negatively affected the blue chip company’s operations.
“The trading environment is characterised by high inflation and an unstable exchange rate with limited availability of foreign currency in the formal banking channel. Consumer spending is constrained by low disposable incomes as salary and wage adjustments continue to lag behind the increases in prices of gods and services. Our distribution and production operations were impacted by the power outages and constrained fuel supplies,” said Delta company secretary Alex Makamure in a trading update for the nine months ended December 2019.
Lager beer volumes declined 43% for the quarter and 46% for the nine months compared to the same period last year.
At Natbrew Zambia, the volume was 32% down for the quarter compared to last year.
“There are some pricing disparities with other alcohol categories particularly driven by the steep increase in maize prices. The sparkling beverages volume grew by 38% for the quarter and is down 40% for the nine months,” Makamure said.
Furthermore, sorghum beer volume in Zimbabwe declined by 41% for the quarter and 25% for the nine months due to constrained supply of maize and escalation in the cost of imported inputs such as packaging materials. There is renewed focus on the returnable scud pack.
“There is a notable volume recovery response to improved product supply and moderated retail pricing. The recently launched no sugar variants have been welcomed by the consumers,” Makamure said.
African Distillers recorded a volume drop of 10% for the quarter. However the company indicated that the demand for ciders and white spirits remained strong adding there was concern about the illicit trade in some of the product categories.
The beverages volume at Schweppes Holdings declined by 23% for the quarter due to an outage of key imported raw materials for both the Mazoe and minute maid brands.
There was an improved performance on the recently launched Fruitade range of products with the entity having commissioned the megawatt rooftop solar plant to mitigate power outages at the Harare factory during the quarter.
Revenue for the quarter grew by 27% in inflation adjusted terms (646% historical) reflecting the changes in product mix and price increases that are based on replacement cost. The revenue increased 2% for the nine months (346% historical).
Delta conceded that sourcing of imported raw materials and services remained a challenge due to delays in servicing overdue payables.