Delta invests US$40m in capital projects
LIVINGSTONE MARUFU
Zimbabwe’s largest brewer, Delta Corporation Limited, is set to invest more than US$40m in capital projects in the new financial year, as it ramps up operations and tightens its grip on market leadership.
With a commanding 60% share of the beverages market, Delta is doubling down on its expansion strategy, with a significant portion of the funding earmarked for the Belmont plant in Bulawayo, which is poised to become a major production hub.
“We are going to invest around US$40m in various projects across our subsidiaries, but Belmont plant is our main focus in the next financial year,” said Group Finance Director, Alex Makamure.
The company is also making minor upgrades at its Southern plant, as part of ongoing efforts to improve efficiency and production capacity.
The investment push comes on the back of strong financials, with Delta reporting a 5% rise in full-year revenue to US$807.4m for the period ending March 2025—a remarkable feat in a turbulent operating environment.
However, the company’s performance was weighed down by two key challenges: a punitive sugar tax and underwhelming returns from its regional operations in Zambia and South Africa.
Makamure highlighted the financial toll of the sugar tax, pegged at US$0.001 per gram of added sugar, which significantly altered the pricing structure and profit margins within the soft drinks segment.
“We paid US$21.1m in sugar tax over the financial year, of which US$14.7m came from our soft drinks unit alone,” he said.
To cushion consumers from steep price increases, Delta opted to absorb the tax costs—a move that, while preserving affordability, squeezed profitability and heightened pressure on margins.
Delta CEO Matlhogonolo Valela, said the dual burden of the sugar tax and sluggish performance in regional markets had dampened growth and competitiveness.
“The introduction of the sugar tax has materially affected our cost structures. We’ve chosen to absorb the tax to maintain affordability, but this has inevitably tightened margins,” Valela said.
Delta is also grappling with persistent import challenges, which continue to disrupt the supply chain and complicate production planning.
The company’s results paint a broader picture of the tough economic climate and the pressures facing Zimbabwe’s fast-moving consumer goods (FMCG) sector.
In Zambia and South Africa, Delta’s regional units remain a drag on overall performance, as they battle currency instability, weak consumer demand, and operational hiccups.
At the same time, rising competition from imported beverages—which often land on the market at cheaper prices—poses a threat to local volumes, particularly as tax-burdened domestic products struggle to compete.
Despite these headwinds, Delta remains bullish about its future, banking on plant modernisation, capacity upgrades, and product diversification to fuel long-term growth and maintain its dominant position.
“We are refining our strategies to maintain market leadership, enhance production efficiencies, and explore opportunities in both local and export markets,” said Valela.
Market analysts, however, caution that Delta’s revenue could soften in the coming year due to the prevailing economic uncertainties and mounting regulatory pressures.
Still, Delta’s performance continues to serve as a key bellwether for investors tracking Zimbabwe’s economic health and evolving consumer trends.
As the battle for market share intensifies and operational costs climb, Delta’s ambitious US$40m capex drive could be the bold stroke that fortifies its legacy in the country’s beverage industry.
