Delta responses to harsh macro-economic environment

Harare – Zimbabwe’s largest brewing company Delta Beverages, announced on Monday that it has increased the prices of its lager beers with immediate effect.

The development come just days after the company was forced to abandon its plans to start charging its products in US dollars by government.

Delta which has not increased its prices for the last five years has recommended selling price for a 375 ml castle lager to $1.00 from $0.80 whilst a 750 ml now cost $2.00 from $1.50.

Although the increase is seemingly low, it can be representative of what to expect going forward.

Many companies are likely to inflate their prices as they try to cushion the cost of production as most raw materials are sourced abroad and require foreign currency which the country does not have at the moment.

As the economy dollarize, this will further push downwards the value of local money whilst driving that of the US dollars upwards.

Producers and retailers alike will prudently have to factor the exchange rate from their pricing in order to remain operational viable.

Delta is the third largest company at the Zimbabwe Stock Exchange with a market capitalisation of $3.4 billion and produces 3.5 million hectolitres of beverages annually excluding its regional operations.

Its annual revenues amount to almost $700 million much of which is derived from beer sales.

The AB Inbev controlled company controls over 60 percent of non-alcoholic beverages in Zimbabwe and 90 percent of alcoholic beverages, together with its associates, in Zimbabwe.

It is also one of the major tax contributors and the largest consumer facing company (FCMG) in Zimbabwe.

There is a market lingo which says when Delta sneezes the whole market catches a cold. True to this adage the prompt move by Government to engage the brewer with the view to reverse the announced price increases shows the significance of Delta as a player in shaping Zimbabwe’s economy.

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