BUSINESS REPORTER
Delta Corporation, a publicly traded brewer, has issued a warning that mounting inflation is a growing risk that could lead to shrinking aggregate demand, Business Times can report.
It comes at a time when Zimbabwe’s annual inflation reached 34.8% in February from 26.5% in December 2023.
Aggregate demand is the total demand for goods and services at a specific time and price level.
Consequently, the real spending decreases and money loses purchasing power as inflation rises.
Faith Musinga, the company secretary for Delta Corporation, issued a warning that excessive inflation may have an effect on overall demand.
She cited two further factors that could have a negative impact on aggregate demand, and these are lower agricultural output and decreasing inflows of foreign currency.
“Aggregate demand may be impacted by the high inflation and reduced foreign currency inflows arising from lower mineral prices and the anticipated reduction in agricultural output resulting from the forecasted below normal rainfall,” Musinga said.
In a trading update for the quarter to December 31, 2023, Delta Corporation reported a 19% surge in revenue in United States dollar terms over the same time in the previous year.
“Group revenue for the quarter increased by 19% in United States dollar terms compared to prior year and grew by 12% for the nine months.
“This reflects the volume growth across business units, with the proportion of United States dollar sales averaging above 70% for the year,”Musinga said.
She added: “Consumer spending is driven by stable United States dollars pricing and liquidity from mining activities, the marketing of commercial crops, government infrastructure projects and diaspora remittances.
“There were also benefits from the payment of year-end bonuses during the third quarter.”
According to Musinga, the lager beer industry kept up its volume growth pace and exceeded previous monthly peak volumes to expand by 15% for the quarter and 14% for the nine months over the previous year.
The new packaging line, which was put into service in August 2023, according to her, has helped to stabilize the supply of products overall. Other advantages include the injection of returnable glass, a steady supply of essential raw materials, and a dependable manufacturing platform.
Musinga claims that the emphasis is still on maximizing the route to market and matching brand and pack availability to demand.
The total volume of sorghum beer in Zimbabwe, including exports, climbed by 4% for the year to date and by 3% during the quarter under review.
However, the greater availability of lager beer caused a 5% decline in domestic sales of sorghum beer.
Supply for both local and regional markets was stabilized by the opening of the Chibuku Super plant in Harare.
“The volume at United National Breweries South Africa grew by 10% during the quarter and is up 3% over prior year for the nine months.
“Chibuku Super continues to penetrate the formal liquor stores and retail chains ahead of the local production of Chibuku Super which is now rescheduled to the fourth quarter,” she said.
Natbrew Plc in Zambia reported a volume increase of 23% during the quarter and 50% over the course of the nine months.
“There was a slowdown in volume following the cost induced price increase in October 2023.
“The market has been impacted negatively by the measures adopted to contain the cholera outbreak,” Musinga said.
“The business has also been adversely affected by the shortages and high prices of maize and the depreciation of the Kwacha.”
According to Musinga, the sparkling beverage category continued its impressive volume recovery, rising 38% in the quarter and 25% so far this year over the prior year.
“This momentum was fuelled by competitive retail pricing and increased availability of diverse flavours and packaging options, she said.
“The unit recorded its highest ever monthly volume in December 2023,” Musinga said.
With the exception of African Distillers (AfDIS), which had a poor quarter and saw a 12% drop in volume from the previous year due to an increase in grey trade on important brands and lower uptake by formal trade partners as a result of poor account management and distorted pricing, the associates’ businesses all performed well.
Utility supply interruptions and plant malfunctions have a negative impact on the availability of AfDIS products.
However, Schweppes Holdings Africa performed well, recording a 16% increase in volume for the quarter compared to the previous year. This was made possible by the new factory that was put into service in November 2023, which would produce Minute Maid juice drinks and bottled water.
Nampak Zimbabwe Limited’s quarter-over-quarter volumes were 8% higher than the same period last year in every business, thanks to increasing paper product exports and a stronger demand for plastic packaging from the beverage industry.
“The business continues to be affected by shortages of key raw materials and power supply disruptions.
“The focus is on improving the capacity to meet the rising demand from key customer sectors and cost containment,” Musinga said.
