Zimbabwe: Delta's First Quarter Volumes Subdued

Zimbabwe Stock Exchange-listed beverages manufacturer Delta Corporation recorded a subdued volume performance for the first quarter up to June 2019, as the market continue to adjust to the rising beverages pricing structure.

In the period under review lager beer volume declined by 57 percent for the quarter while sparkling beverages volume slumped 79 percent compared to the corresponding period last year.

Delta corporation says demand was subdued on account of affordability issues as "market players adopted wide-ranging pricing models."

This comes as retailers have been charging varying prices for same products despite Delta having recommended retail prices. The sparkling beverages segment of the beverage making firm resumed full production after the company had closed three of its soft drink plants, including the one in Graniteside in Harare earlier this year after reportedly running out of critical raw material.

In a statement accompanying the trading update Delta corporation indicated that loss in value of disposable earnings resultant of recently promulgated monetary and fiscal policy changes by the apex bank and government contributed to the reduced volumes uptake for the period under review.

"The fundamental changes in the economy arising from the recent fiscal and monetary policies have significantly affected the business. The availability of foreign currency remains a challenge, disrupting imported supplies into the value chain.

"The macroeconomic changes have led to a surge in inflation and a fast depreciating exchange rate which have resulted in the erosion of disposable incomes and reduced consumer spending," said Delta.

On the other hand, local sorghum beer volume grew two percent compared to the corresponding period in 2018 first quarter, a segment the company says has been consistent despite the difficulties in accessing imported packaging materials and services.

Another sorghum beer operation, National Breweries (Natbrew Plc) in Zambia had reported positive volume trends following enhanced product formulation.

Delta however bemoaned dearth on the supply side given the El Nino induced drought that adversely affected agriculture in the 2018/19 rainfall season leading to minute cereal harvests.

"There are concerns about the supply of agricultural cereals arising from the drought and recent changes to the marketing policies," said Delta.

Delta, one of the biggest companies listed on the Zimbabwe Stock Exchange has experienced turbulent operating environment since late last year thereby compromising the beverages maker's ability to service its market.

The soft drinks category in particular was adversely affected by the challenges in securing raw materials, leading to extended periods of production stoppages and out of stock situations.

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