Zimbabwe’s top beverages company Delta has reported that performance for the third quarter period to December was very strong as demand went up on the back of renewed optimism after the change of government.
In November following an operation code named Operation Restore Order which the army said was targeted at criminals around the then President Mugabe, a new political dispensation was ushered.
Mnangagwa a touted reformist took over power succeeding Mugabe who had led Zimbabwe for 37 years. Under Mugabe’s rule the economy mostly underperformed and endured successive recessionary periods mainly due to adverse policies.
Delta said Lager beer segment which is the second top income contributor at operating income level and the top margin driver, reported a 36% growth in sales volumes in the 3 months period to December ahead of the same period in the previous year.
Over the 9 months period to September, lager beer volumes grew by 20% over the comparable prior period last year. Delta said there were gaps in meeting consumer preference of brands and packs owing to this sharp increase in demand, particularly in the latest 3 months period.
A strengthening lager beer performance is normally an indicator of earnings recovery as the segment has historically anchored margins and in turn drive superior profitability.Over the 3 year period between 2014 and 2017 Delta has reported successive decline in Lager volumes and revenues in each half year period and the tide turned in 2018 when both revenue and volumes reversed.
At its peak in 2014, Delta sold 1.7 million hector litres of lager beer volumes. The brewer is therefore quite a distant away from reclaiming these levels even as average price per litre has fallen down in a bid to save and stimulate waning demand over the years.
In the latest update Delta went further reporting that sparkling beverages volumes improved by 14% and 5% over the 3 months and 9 months period respectively compared to the same period last year.
In 2016 which covers the 2017 financial year, Delta bemoaned incessant rains as having dampened outdoor activities thereby consequently dampening the high consumption of sparkling beverages that typically characterise the festive seasons.
Sorghum beer volumes went up by 10% for the quarter while performing flat for the 9 months period. Divisibility and cash shortages in Zimbabwe has been cited as affecting demand for the category’s products.