Rise in prices weighs on Delta’s lager volumes

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    Harare – Delta Beverages in its trading update for the fourth quarter and full year ended March 31, 2018 says the Lager beer volume declined by 3 percent in comparison to prior year for the quarter and is up 31 percent for the full year and reduced  demand is due to the increase in RTGS$ wholesale and retail prices.

    Over the recent past, increase in lager sales has been sustaining Delta’s revenue growth and in the previous quarter its revenue increased by 33 percent (30% organic growth) for the quarter and 37 percent for the half year respectively driven by the volume growth in the beer businesses.

    Delta is one of Zimbabwe’s blue chip counter with 65 percent market share for both sparkling and sorghum beverages and is owned by AB INBEV the world largest beverage maker.

    In the period under review, the Sorghum beer volume in Zimbabwe contracted by 2 percent versus prior year for the quarter and grew by 5 percent for the full year.

    The beverages maker said demand for the category remains encouraging despite the cost pressures on imported packaging materials, spares and the repricing of agricultural cereals with Chibuku Super contributing 85 percent of the total category volume.

    Elsewhere its subsidiary National Breweries Plc – Zambia (Natbrew Plc) recorded a volume decline of 24 percent for the quarter and is flat on prior year for the twelve months.

    Delta beverage pointed out that the ever deteriorating economic environment which saw prices of basic commodities soaring is responsible for the downward trend.

    “Product demand has reduced following some price increases and down trading to subsistence offerings. The Sparkling beverages business was virtually closed during the quarter due to non-availability of imported raw materials.”

    Overall, volume declined by 89 percent compared to prior year for the quarter and decreased by 44 percent for the full year.

    Additionally, the Company said operations have since resumed albeit at a slow pace.

    “There are ongoing collaborative interventions together with The Cola-Cola Company to restore the business to a sustainable footing. The Group revenue will reflect an increase of 33 percent for the quarter and 26 percent for the full year.

    “ It is noted that the financials are distorted by the changes in the reporting currency from USD to RTGS$, noting that the Group maintained stable pricing for the nine months and only partially rebased prices in the fourth quarter. The full impact of the introduction of the inter-bank exchange rates on the Group’s financial position is still being assessed. The full year results are expected to be published on 16th May 2019,” Delta said in the update.

    The country is nearing the much dreaded economic horrors of 2008 punctuated by hyperinflation, widespread shortages of foreign currency and fuel coupled with a spike in prices of everything, including staple food.

    The rise in prices of basic commodities and services first became evident in September 2018 when government put in place a raft of monetary measures that included the separation of accounts and the introduction of a punitive 2 percent tax regime.

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