Business - Companies & Markets - Featured - Local - November 12, 2020

Delta Beverages HY profit rises to ZWL$3.22bn, sorghum beer volumes down 31% on limited access to key trade channels

By Falton Zveushe

HARARE – After-tax profits for beverage manufacturer Delta Corporation rose 260% to ZWL$3.22 billion for the half-year ended 30 September 2020, the company has revealed.

The surge, from ZWL$898.21 million recorded in the same period last year, was backed by a steady topline growth. Inflation-adjusted revenue increased by 11% to ZWL$12.94 billion from ZWL$11.63 billion in the prior period last year.

Operating income went up by 15% to ZWL4.03 billion from ZWL3.51 billion.

In the period, lager beer volumes grew 3% compared to the same period last year. This reflects a growth of 18% in the second quarter, reversing the sharp decline recorded in the first quarter when the COVID-19 restrictions were at their peak.

“The volume recovery is underpinned by competitive pricing and consistent supply. The volume is currently skewed in favour of the mainstream brands and larger packs due to changes in consumption occasions and settings,”  said group chairman Canaan Dube in a statement accompanying the results.

In Zimbabwe, the sorghum beer volume declined by 31% compared to the same period last year due to the limited access to key trade channels such as bars, bottle stores, and the rural markets during the lockdown, particularly in the first quarter.

“The value chain costs escalated more rapidly in response to the impact of the depreciating exchange rate on imported brewing cereals and packaging materials.”

Sorghum beer volume at Natbrew Plc (Zambia) rose 8% compared to the same period last year.

“The nascent volume recovery is attributed to the improved appeal of Chibuku Super. There remains significant competitive pressure from the illegal trading in bulk beer, compromising the business recovery efforts,” he said.

The South Africa entity, United National Breweries was largely closed for the first four months as the authorities implemented very strict prohibitions on the sale and consumption of alcohol under the Covid-19 lockdown measures. Currently, alcohol sales are only permitted four days a week excluding weekends.

Sparkling beverages volume was up 22% over last year, albeit from a low base.

“The business continues to recover market share on the back of consistent product supply and competitive pricing. There was a swing in volume towards non-returnable take-home packs, reflecting the reduced out of home activity due to Covid-19 restrictions,” Dube said.

Afdis recorded volume growth of 15% for the six months compared to the prior year, driven by the spirits and ready to drink categories. However, there were some supply gaps arising from challenges in the logistics of imported raw materials.

Schweppes Holdings Africa reported a lower volume outturn at 18% below the prior year, partly due to challenges in accessing imported raw materials and the impact of Covid-19.

“The business will benefit from the improved supply of juice concentrates and the introduction of new flavours under the Minute Maid brand,” Dube said.

Nampak Zimbabwe is benefiting from the volume recovery in the beverage sectors and improved access to imported raw materials.

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