Delta volumes up

HARARE - Global brewer, SABMiller says Delta Corporation lager volumes increased by nine percent in the six months ended September 30, 2012.

“A focus on premiumisation and pack innovation coupled with improved availability helped increase volumes in our associate in Zimbabwe by nine percent on an organic basis,” the company said.

The growth in the local beverage maker’s capacity comes on the back of its ongoing installation of a new 6000 kilo hectolitre (khl) plant in Harare’s Southerton Industrial area as part of its efforts to meet peak demand.

The new beer plant, according to the company, will add to other production lines that have been recently installed in order to increase output and production.

“We are in the process of commissioning the plant,” Delta chief executive Pearson Gowero said early this year adding the plant was being installed to afford the business a lot more flexibility on product availability in the competitive environment.

“The new plants will be more efficient on utilities like water and electricity which is a major cost reduction mechanism.”

The increase in beer production comes as the company said it had sold record volumes of its beer products and for the first time managing to supply the market fully.

Delta’s lager volumes grew 23 percent in its full year, underpinned by a faster growth of the premium segment and improved product availability while sorghum beer grew by 15 percent and 26 percent respectively.

The company said growth in beer sales to surpass its 1998 peak was mainly driven by urban dwellers who have more disposable income and host consumption events frequently.

Delta recently became the first listed company on the Zimbabwe Stock Exchange to surpass a $1 billion market capitalisation a move which analysts said could attract more foreign investor participation on the local bourse, which has been underperforming due to liquidity challenges.

Foreign investor participation on the local bourse has been on the decline mainly as a result of political uncertainty and the implementation of the country’s controversial indigenisation regulations.

“This is an issue that is widely followed by investors as there are some  investors that are mainly interested in investing in companies with big capitalisations and the moment you have a company that is worth a billion dollars, it brings our market into the spotlight, bringing investors to the Zimbabwe Stock Exchange,” Investments analyst Ranga Makwata said.

“It’s really a good story for the market like ours.”

Widely regarded as one of the best performers on the local stock exchange, Delta recorded a 36 percent revenue growth to $544,8 million on prior year while operating income grew 44 percent to $98,3 million in the full year to December 2011.

Attributable income stood at $73,7 million, 36 percent up from $53 million at the end of 2011.

Best Chideme, an equities analyst with MMC Capital Research, said Delta’s business model gave it a competitive advantage over its competitors.

“Delta currently has control of over 90 percent of the beverages market in the country and as such their products gives them a competitive advantage,” he said.

SABMiller early this year increased its stake in Delta Beverages to 40 percent from an initial 38 percent.
“During the year, we purchased additional shares in Delta, bringing our shareholding to 40 percent (25 percent group effective economic interest),” SABMiller said.

The announcement by SABMiller comes after a $12 million injection in 2009 that upped its stake by 2,5 percent.

SABMiller is the world’s second-biggest brewer, with brands such as Miller Lite, Grolsch, Peroni, Castle, Snow, Pilsner Urquell and Aguila beers.

The London-based company has expanded rapidly over the past two decades from its South African roots and recently concluded its acquisition of Foster’s, Australia’s biggest brewer in a $10,2 billion deal.


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