• Delta's Revenue soared by 164% to ZWL1.9 trillion in HY'24
  • Nyathi Beer opaque beer production at 30 000 hectolitres against Delta's 350 000 hectolitres
  • Innscor possesses the firepower to rival Delta's capital outlays and absorb losses in its operations till its market penetration strategy triumphs 

Harare - Delta Corporation's revenue witnessed an astounding 164% surge, reaching a staggering 1.9 trillion Zimbabwean dollars for the half year ended 30 September 2023. With the sorghum business contributing 33% of this remarkable growth, a fierce battle of heavyweights has emerged in the sector with the introduction of Innscor's Inyathi Beer. While previous attempts to introduce opaque beer brands have struggled or even died a natural death, Innscor's entry holds promise. Despite this, Delta Corporation reports that Chibuku's market share remained dominant at 93%, leaving Inyathi Beer grappling to gain traction, much like other smaller players. Is this the endgame for Innscor's Nyathi Beer, or can it still turn the tide?

Innscor has ramped up its production of the Nyathi Beer to an impressive + or - 30,000 hectolitres per month, challenging the industry behemoth, Delta, which currently churns out a staggering 350,000 to 400,000 hectolitres a month. Despite Innscor's relatively smaller plant size compared to Delta's, their determination knows no bounds. But Delta isn't resting on its laurels. They're gearing up to unleash a game-changing weapon—the new Chibuku line, capable of filling a mind-boggling 20,000 bottles per hour, equivalent to a whopping 250 hectolitres. With an annual output projected at 1.3 million hectolitres, Delta's audacious pool of investments in the opaque beer market is set to soar, totaling a staggering US$65 million. While Innscor kick-started its operations with a modest investment of US$7.5 million for the Nyathi Beer, they're far from being outmatched. With planned capital expenditure of US$58 million in the pipeline and an impressive 35% of earnings allocated for further investment, Innscor possesses the firepower to rival Delta's capital outlays. But here's where Innscor truly shines.

They possess the resilience and fortitude to weather losses in their sorghum beer operations, holding steadfast until their market penetration strategy triumphs. While they haven't conquered the Harare market just yet, Innscor is strategically focusing on specific outlets, already securing an impressive 20% market share in those targeted areas. Adding fuel to the fire, retail outlets disillusioned with Delta's credit control issues have made a bold switch, opting for Innscor instead. The perfect conditions are set for the ultimate clash of brewing titans. Now, the question arises: What kind of muscle power does Innscor possess in this epic battle?

Innscor is a formidable player in Zimbabwe's food industry and now stands as a major contender to Delta's reign. With a vertical integration surpassing other listed players, Innscor's expansive reach within the food sector ensures a steady supply of raw materials for its opaque beer. What sets Innscor apart from the other small players is its extensive distribution network, which poses a potential challenge to Delta's market reach. Further, an impressive track record underscores Innscor's management prowess, as the group has consistently expanded across various food manufacturing sub-sectors, defying the volatile macroeconomic landscape. Innscor possesses the financial muscle to invest in the necessary capital expenditure, ready to take on Delta's stronghold. Such financial muscle is key as most supermarkets prominently feature Delta fridges catering primarily to Delta Beverages, hence Innscor should aim to disrupt this norm. Furthermore, Innscor possesses the resilience to absorb losses in its sorghum beer operations, determined to persevere until its market penetration strategy triumphs. With Innscor's impressive arsenal, Delta's dominance faces a formidable challenger in the ongoing battle for market supremacy.

However it is evident that Innscor faces an uphill battle to penetrate the market, but their determination suggests they will eventually give Delta a run for their money. Currently, Delta holds a significant lion's share of the market. However, our extensive interviews with a large sample size in Zindoga revealed interesting insights. Among those surveyed, 26% expressed a preference for Inyathi beer, citing its lower carbonation levels, which spared them from the discomfort of stomach issues the following morning. Intriguingly, 60% of the respondents admitted to not yet having tasted Inyathi beer, indicating the untapped potential for Innscor's offering. These findings highlight the impact Inyathi beer can potentially have on the market, suggesting that with perseverance, Innscor could make significant strides in challenging Delta's dominance. As the battle for consumer loyalty intensifies, Innscor's resilience may prove to be the key that unlocks their success.

While larger beer and spirits reign supreme in overseas markets, Africa paints a different picture. Opaque beer, a beloved brew on the continent, commands a staggering 65% share of total alcohol consumption. In Zimbabwe, the landscape is shaped by both lager and opaque beer, driving a significant 68% of the nation's alcohol consumption. Within this dynamic, Delta emerges as a dominant force, supplying the local alcohol markets.

Though other opaque beer manufacturers exist in the country, their combined market share falls below 10%. This can be attributed to challenges such as poor corporate governance and limited production capacity. We recall Ngoda's ambitious entry into the opaque beer market in 2015, poised to challenge Delta's dominance. However, despite its continued operations, Ngoda's impact has remained minimal, leaving Delta unrivaled. The resilience and market strength of Delta in Zimbabwe's opaque beer sector serves as a testament to the company's enduring dominance. As the industry evolves, it will be intriguing to see if any contenders can truly disrupt Delta's reign and reshape the landscape of the opaque beer market.

In the realm of small players, Ingwebu Breweries stands tall with over a decade of existence. Operating primarily in Matabeleland, the brewery claims a notable 36% market share, showcasing its regional strength. However, when compared to the heavyweight contenders, Ingwebu's impact is limited. On the other hand, the Bulawayo Municipal Commercial Undertaking (BMCU) has managed to defy the odds. As one of the rare breweries owned by parastatals, BMCU's beverages manufacturing unit has successfully turned losses around in 2019, securing its stability amidst industry challenges. Sadly, the same cannot be said for Kwekwe City Council's Simba Breweries, Mutare City Council's Pungwe Beer, and Gweru Council's Go Beer. These breweries have been plagued by issues of corporate governance and solvency, hindering their growth and market presence. While these small players face their own hurdles, it is important to note that they lack the heavyweight status boasted by Innscor. Innscor's extensive reach in the food industry and its ability to invest in capital expenditure sets it apart, giving it an advantage in the competitive landscape.

In the face of Innscor's aspirations to challenge Delta's Chibuku brand, we pinpoint four formidable sources of competitive advantage that strengthen Delta's grip on the market. These factors serve as barriers to Innscor's potential to dethrone the reigning champion. These are a regional footprint, and a strategic shareholder with market expertise, size, and taste.

Delta's strategic operations extend beyond Zimbabwe, reaching into Zambia and South Africa, where they manufacture sorghum beer. This operational diversity serves as a significant competitive advantage, offering a multitude of benefits. Firstly, it contributes to economies of scale, driving efficiency and cost-effectiveness. Secondly, it reduces earnings volatility by diversifying revenue streams across different markets. Lastly, it provides an additional source of foreign currency, bolstering Delta's financial stability.

In Zambia, Delta's(Natbrew) focus on the Banana flavor proved fruitful, resulting in a remarkable 67% increase in production volumes to 647,000 hectoliters. The demographic similarities between Zambia and Zimbabwe facilitate an easier penetration for Delta, as the right market structure aligns with consumer preferences.

On the other hand, Delta's performance in South Africa(United National Breweries) experienced stagnation as the company continued its efforts to refine its market penetration strategy. South Africa, known as the rainbow nation, boasts a distinct demographic landscape, necessitating a strategic positioning tailored to its unique market dynamics. Consequently, Delta remains agile, continually adjusting its strategy to navigate this diverse market. With this in mind, recognizing the strong demand for sorghum beer in the region south of the Limpopo River, Delta is strategically focusing on this segment. The demographics align favorably with the company's strategy, providing a fertile ground for growth and market dominance. To further enhance its performance in South Africa, Delta plans to commission a new Chibuku Super plant for its subsidiary, United National Breweries, in the fourth quarter of this year. This expansion aims to capitalize on the South Africans' continued consumption of opaque beer, which reached 779,000 hectoliters during the period.

Delta's stronghold in Zimbabwe's beer market is not a mere coincidence. With decades of experience under its belt, Delta has honed its craft and established itself as a key player. But it doesn't stop there. The company strategically leverages its main shareholder, AB inBev, a global brewing powerhouse with an impressive portfolio of around 630 beer brands in 150 countries. As the world's largest brewer, AB inBev brings unparalleled expertise and resources to Delta's doorstep, propelling its success to new heights. Recognizing the immense potential in sorghum beer, Delta has invested over US$45 million to date in this segment alone. This significant commitment reflects their determination to meet the surging local demand and solidify their position as a market leader. The recent commissioning of the state-of-the-art Chibuku Super plant at the Harare Brewery further amplifies their production capacity, paving the way for increased volumes in the second half of the year. Delta's strategic investments not only address supply gaps in the domestic market but also extend to regional markets. However, it's important to acknowledge that Innscor, with its injection of US$7.5 million into the Nyathi beer project, was a vivid indicator that they have come to tangle. Their substantial investment signals their serious intent and determination to establish a strong presence. It's clear that Innscor means business and is here to stay.

While Delta's aforementioned competitive advantages are undeniably significant, it is the taste factor that reigns supreme in setting them apart. A survey conducted by C+R Research, polling 2,000 Americans, revealed that taste is the primary consideration for beer enthusiasts, followed by style and price. While this may not be an absolute rule, we believe that Zimbabwean drinkers share a similar sentiment, albeit with a potential higher emphasis on price. Recognizing the pivotal role taste plays in consumer preferences, Delta is poised to capitalize on this advantage by introducing more flavors in 2024. This strategic move is set to further strengthen their competitive edge, enticing a wider range of consumers with an array of tantalizing options. Evidence of Delta's taste-driven success is reflected in its impressive volume growth in Zimbabwe. In the recent period, volumes increased by 4%, reaching 2,173,000 hectoliters compared to the comparable period's 2,084,000 hectoliters. This upward trajectory is expected to continue, as Delta's commitment to delivering a superior taste experience resonates with the discerning Zimbabwean palate.

As we witness the clash of these brewing heavyweights, Innscor emerges as a formidable contender in this high-stakes fight. With a capable management team at its helm, Innscor possesses the strategic prowess to make impactful moves and challenge Delta's dominance head-on. The stage is set for an intense battle between these industry giants. Yet, amidst this fierce competition, it's essential to recognize the significance of a growing population in Zimbabwe and the broader region. The increasing demand for quality beverages provides an opportunity for both Delta and Innscor to thrive. In this opaque beer arena, both these giants can serve as pivotal players, catering to the diverse preferences of consumers in Zimbabwe and beyond. The emergence of two formidable competitors signifies a shift in the landscape, offering consumers a wider range of choices and pushing the boundaries of innovation. The dynamic interplay between Delta and Innscor promises an exciting future for the opaque beer segment, with both giants vying for market supremacy.

As the battle intensifies, the market eagerly awaits the strategic moves and innovative offerings from both Delta and Innscor. In this brewing showdown, the potential for dual giants to shape the opaque beer industry within the country and region cannot be overlooked. The stage is set for a thrilling spectacle, where two heavyweights compete for the hearts and palates of consumers, driving the industry forward into a new era of excellence.

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