July 24, 2019

Zim beer sales drop

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Ndaka Majaka

ZIMBABWE Stock Exchange (ZSE)-listed beverage manufacturer, Delta Beverages, has revealed that its clear beer sales have fallen by 57 percent owing to the current economic challenges facing the country, among them low consumer disposable incomes.

Delta’s company secretary, Alex Makamure announced this in the group’s first quarter financial year update ending June 30, 2019 issued this Wednesday.

“Lager beer volume declined by 57 percent compared to the prior year for the quarter. Demand was subdued on account of affordability issues as market players adopted varied pricing models.

“The sparkling beverages (carbonated drinks) volume declined by 79 percent for the quarter. The   business has resumed full production,” Makamure said.

Makamure pointed out that consumer spending had been knocked by the prevailing macro-economic fundamentals characterised by a surge in inflation and a fast depreciating exchange rate.

“Our product prices have not yet factored in the full impact of the depreciation of the exchange rate,” he added.

Some cash strapped Zimbabweans are opting for opaque beer and illicit brews as the economy continues face challenges.

Sorghum beer volumes grew by two percent, compared to the previous year during same period.

“Product supply has been consistent despite the difficulties in accessing imported packaging materials and services. There are concerns about the supply of agricultural cereals arising from the drought and the recent changes to the marketing policies,” said Makamure.

However, National Breweries Plc Zambia (Natbrew Plc) – a Delta subsidiary – recorded encouraging volume trends in recent months following introduction of a returnable pack of opaque beer and an enhanced product formulation.

With associate, African Distillers (Afdis), due to report their full year results to June 30, 2019, Makamure pointed out that the group revenue is expected to reflect an increase of 92 percent revenue for the quarter, noting that the figures were reported in United States Dollars.

Delta is still trading under a cautionary issued with respect to the notice received from The Coca-Cola Company (Coca-Cola) advising of an intention to terminate the Bottler’s Agreements with the Group entities (Notified Intention).

This followed the merger of AB InBev and SABMiller Plc in October 2016 and the subsequent agreement in principle reached between Coca-Cola and AB InBev to explore options to restructure the bottling operations in a number of countries.

“The ongoing discussions among the parties are slower than anticipated in light of the significant changes to the macro-economic factors in Zimbabwe,” Makamure said.

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