15 May 2014

Zimbabwe: Economy - Delta Urges Quick Policy Shift

DELTA Beverages says the economy requires a quick policy shift to stimulate growth after a poor performance in 2013 blamed on weakening consumer demand and high government levies.

Volumes for Delta's mainstay lager beers dropped 18 percent in the full-year to March 31 while total beverage volumes remained flat compared to the prior year.

"I think one thing that is apparent is that we are witnessing worsening economic fundamentals. Everyone was hopeful post the election in July last year and I think some part of that hope is slowly turning into some kind of despair," said chief executive, Pearson Gowero at a briefing for the group's 2013 full year results.

The economy has slowed down since President Robert Mugabe and his ZANU-PF party won the elections last year, ending a unity government with the opposition MDC which had helped stabilise the economy.

Zimbabwe has also struggled to attract FDI in recent years or funding for its economic blueprint, ZimAsset due to concerns over the perceived lack of respect for property rights and uncertain business climate, in particular the implementation of the empowerment law.

"The trends that we were seeing post-Christmas are the same trends that we are trading at the present moment so we are not seeing any green shoot. We haven't seen any rays of hope.

"Let's put it, we really like the stakeholders particularly government to make the right decisions and in some instances bite the bullet so that we can get our economy going," said Gowero.

The company had suspended its contract farming scheme for barley due to high stocks, he added.

Sparkling beverages gross sales dropped two percent to $225 million.

Consumers were switching to affordable alcoholic beverages such as sorghum beer, Chibuku, whose gross sales grew 24 percent to $146 million for the full year.

The group would this year commission a third plant at a cost of up to $10 million to grow revenues, Gowero said.

The contribution of associate companies also fell, weighed down by Schweppes Zimbabwe whose supply chain was largely affected by the recent acquisition of Mazoe Estates by government.

Gowero said wines maker, African Distillers was expected to register strong growth in the current year after commissioning a new cider making plant.

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