PHILLIMON MHLANGA
Zimbabwe’s biggest brewer, Delta Corporation, is feeling the pinch
of unrelenting economic crisis with customers cutting back spending on beer.
The waning demand has resulted in slump in volumes at the dominant producer of commercial beer in Zimbabwe, which enjoys more than 90%
of the beer in the country.
The latest financial statements show a 42% slump in lager beer volumes during the 12 months to March 31, 2020.
Sorghum beer dropped 25% during the reviewed period compared to prior year.
Sparkling beverages volume declined by 17% compared to the previous year. Associate entities also recorded subdued performances.
Schweppes Holdings Africa recorded a volume loss for the year although its products continued to dominate the dilutable soft drinks category.
At Nampak Zimbabwe, the overall demand remained subdued, reflecting the reduced spending on most packaged consumer goods.
In Zambia, sorghum beer volume declined by 27% compared to prior year.
Revenue for the group increased by 10% to ZWL$8.4m during the
reviewed period from ZWL$7.7m in the prior year.
Profit for the group declined to ZWL$1,09bn during the year to March 31, 2020 compared to ZWL$1.1bn reported in the previous year.
Zimbabwe has experienced adverse effects of the coronavirus pandemic
following the implementation of lockdowns since March 30 this year. The lockdown has reduced economic activity and exacerbated the already fragile economy.
The group said the trading environment has been turbulent particularly due to hyperinflation, unstable exchange rate, limited availability of foreign currency in the formal banking channels and the drought induced
shortages of brewery materials.
It said the supply of fuel and key utilities such as water and electricity continued to be erratic, thereby disrupting production and distribution
operations.
“The prevalence of multiple exchange rates distorted operating costs and product pricing. The debasing of incomes as part of the Transitional Stabilisation Plan led to a collapse of demand across all beverages categories.
Household incomes continue to be eroded by hyperinflation,”
Delta board chairman Canaan Dube said.
“The board is concerned about the deteriorating operating environment as
indicated by hyperinflation, rapid changes to the policy environment, weak local currency and the existence of the multiple and disparate
exchange rate. The shortage of foreign currency in the formal
banking channels has caused delays in settlement of overdue
external obligations.”
The group has legacy foreign liabilities of US$63.8m. Delta has registered these liabilities with the central bank at 1:1.
An amount of ZWL$1.64bn was recorded as an unrealised foreign exchange loss relating to the legacy foreign debt.
