Delta Corporation reports decline in beer sales as sparkling beverages volume grow by 35%

ZIMBABWE – Delta Corporation, Zimbabwe’s largest beverage manufacturer has reported that its beer sales both lager and sorghum, took a dip in the first quarter to June 30, 2020, but its soft drink’s sales were positive.

The mixed performance was achieved on the back of economic headwinds and limited access to markets due to Covid-19 induced restrictions.

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Delta operates in four segments: non-alcoholic beverages, sparkling beverages, lager beers and traditional beers.

Its revenue for the first quarter was 5% below prior year in inflation adjusted terms compared to a growth of 765% in historical cost terms.

Earnings Before Interest and Taxes grew by 10% in inflation adjusted terms and 838% in historical cost, compared to year on year inflation of 737%.

Lager beer volume for the quarter declined by 18% compared to the same period last year, noting the low outturn in prior year during the transition to the mono-currency system.

Sorghum beer volume in Zimbabwe declined by 51% for the quarter due to limited access to the market particularly in trade channels such as bottle stores and bars.

The category witnessed higher price adjustments driven by escalation in the cost of imported inputs such as packaging and brewing cereals.

Delta said its National Breweries Plc unit (Natbrew) in Zambia saw its volume rise by 17% for the quarter, benefiting from price moderation and the ongoing measures to revive volume.

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The sales were mostly in Chibuku Super which is more accessible in the off-premise trade channels. The performance was constrained by a tight working capital cycle.

Its South Africa entity, United National Breweries traded for a few weeks during the quarter as the authorities implemented very strict prohibitions on the sale and consumption of alcohol under the COVID-19 national lockdown measures.

The prohibition was partially lifted in June but reintroduced on 16 July 2020. The ban could remain in place for an extended period due to the escalation in COVID-19 infections.

Sparkling beverages volume grew by 35% for the quarter compared to prior year. The recovery momentum has been slowed by the limited market access and limited activity in key sales channels.

The category has benefited from a stable market supply with the sales mix shifting to one-way packs and take-home offerings. African Distillers (Afdis) recorded an overall 8% volume growth for the quarter driven by the spirits category.

The beverages volume at Schweppes Holdings where it manufactures and distributes non-carbonated still beverages, declined by 32% for the quarter reflecting the constrained trading under COVID-19 conditions.

Exports have been affected by the depreciation of regional currencies which reduces competitiveness. There has been an improved intake of juicing and processing fruit.

According to the company, the trading conditions going into the second quarter will remain largely unchanged as impacted by the COVID-19 restrictions and unstable macro-economic factors.

The business is set to benefit from the improved access to foreign currency through the new auction system and domestic sales in foreign currency.

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