Harare- National Breweries Plc- Zambia (Natbrew Plc) a unit of Delta Corporation recorded an acute volume decline in the second quarter period to 30 September 2019.
Sales volumes were13% down for the quarter compared to the same period last year. In the Q2 of 2019, Natbrew volumes swelled by 13% in response to the volume recovery initiatives which focused on packs and competitive pricing.
Natbrew brews the Chibuku brand of opaque beer (Chibuku Shake Shake and Chibuku Super) and distributes it countrywide in cartons and returnable plastic bottles.
The company attributed the volume decline in the reported quarter to the higher pricing on the back of a steep increase in maize prices and the depreciation of the Kwacha.
The currency depreciation affects the transport sector from increased imported fuel bill which feeds into the cost of final products distribution cost to markets which is passed on the final consumer.
An annual inflation rate increase to 10.7% as at the end of October 2019 has resulted in continuous food price hikes.
In early July this year, the Food Reserve Agency increased the maize purchasing price by nearly 50% from ZWM75 last year to ZMW 110 per 50kg bag until 31 October 2019 in a bid to better reflect the increased production costs as prices of inputs increased following the depreciation of the Kwacha and higher market prices.
For the year ended 31 March 2017, Natbrew recorded a volume decline of 37% on the prior year for the same period and this decline was largely attributed to the company deliberating closing breweries to stop unprofitable delivery routes. The company also recorded a loss of K38 million.
Delta Corporation has a controlling stock over National Breweries, listed on the Lusaka Stock Exchange.
According to their trading update for the second quarter, consumer acceptance of the recently launched returnable pack has been encouraging even though supply is also constrained by capacity and power supply distributions.
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