Delta lager volumes down 57% in Q1 as pricing and economic pressures weigh

Delta Corporation lager beer volumes fell 57% in the first quarter to June but group revenue, despite the subdued performance from key SBUs, and inclusive of Afdis was up 92% for the quarter.

In a trading update for the quarter, Delta noted that performance was subdued mainly due to reduced consumer spending on the back of a fragile economy while at the same time the group’s product prices have not factored in the full impact of the depreciation of the exchange rate. While price increases have been made in local currency, the products are now priced below regional benchmarks.

“The fundamental changes in the economy arising from the recent fiscal and monetary policies have significantly affected the business. The availability of foreign currency remains a challenge, disrupting imported supplies into the value chain.”

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

Sorghum beer volume in Zimbabwe grew by 2% versus prior year for the quarter. Delta said despite the difficulties in accessing imported packaging materials and services, product supply has been consistent.

“There are concerns about the supply of agricultural cereals arising from the drought and the recent changes to the marketing policies.

At National Breweries Plc – Zambia (Natbrew Plc), Delta said there was encouraging volume trends in the recent months following the introduction of a returnable pack and an enhanced product formulation.

Sparkling Beverages volume declined by 79% for the quarter. The business has resumed full production following an extended period of shutdown due to shortages of imported raw materials.

Group revenue which includes Afdis will reflect an increase of 92% for the quarter, noting that the comparative prior year figures were reported in US$. Afdis are due to report their full year results to 30 June 2019.

Delta said discussions between AB Inbev and  The Coca-Cola Company on the termination of the Bottler’s Agreements with the group are ongoing though they had slowed  in light of the significant changes to the macro-economic factors in Zimbabwe.

Delta is due to release a trading update this week at the AGM, which is expected to show the post June 24 trend and the impact of power cuts on operations.


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