Depressed economy hits Delta lager volumes

HARARE - Listed brewer Delta Corporation (Delta)’s lager volumes declined by 25 percent in the half year to September 2014 due to depressed consumer spending coupled with increased excise duty.

The group — about 40 percent owned by London-based SABMiller — said Zimbabwe’s general economic performance remains subdued, “with significant pressure on consumer disposable incomes”.

Despite slashing beer price by between five cents and 20 cents across the whole portfolio in early September, Delta said “the excise duty increase… has (also) continued to limit the affordability of…products”.

With effect from December 2012, government increased excise duty on lager beer from 40 percent to 45 percent of manufacturer’s price.

The move has negatively impacted on both retail pricing and volumes.

However, sorghum beer volumes went up 12 percent for the quarter to September 2014 and 14 percent above prior year for the six months.

“Chibuku Super has been rolled out nationally and is driving the overall category performance,” said Delta.

The strong growth in opaque beer has largely been spurred by price affordability and value for money realised from the Chibuku Super brand which trades at one dollar for 1,25 litres.

Overall, total beverage volume was down three percent and one percent on prior year for the quarter and six months respectively.

The lager beer volume was 29 percent below prior year for the quarter while further interventions to stimulate volume and grow value have since been implemented.

According to the listed beer manufacturer, a 375ml pint of lager is now sold at a recommended retail price of $0,95 although most retail outlets are likely inclined to price it at a dollar.

The price of a 750 ml quart has been reduced from $1,75 to $1,60 while the Eagle Lager quart which was retailing at $1,20 has been reduced to $1.

The magnum 660ml returnable bottle for Golden Pilsener, Zambezi Lager and Bohlingers has also been reduced from $1,80 to $1,75.

Also reduced is Castle Lite non-returnable bottle which was previously retailing at $1,20 has now gone down to $1,15 including its popular 440ml can which is now $1,25 from $1,30.

The soft drink volumes comprising both sparkling and the alternative beverages are down eight percent for the quarter and six percent below prior year for the six months.

The Maheu and dairy mix beverages continue to record growth.

Delta noted that revenue for the quarter slumped by five percent and went down by four percent for the six months, reflecting notable changes in sales and product mix in favour of value propositions.

The beverages maker said this will ultimately have a bearing on the financial performance as half year results will be published on next mid-month.

Comments (2)

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aqua. - 14 October 2014

whilst the price to the consumer has been reduced, Delta, in its usual arrogance, increased the wholesale price. What it means is that the trader is getting a price increase, but being forced to effect a price reduction. it means less margins to the trader,whilst delta gets a bigger share. Instead of the entire value chain benefiting from the new plant, it looks like Delta is determined to squeeze out the trader. Delta should emulate Afdis who passed on the savings to everyone in the value chain. If not Delta will suffer resistance from different angles, but more effectively from traders as we will look for alternative brands and buy less of Delta products. We cannot wait for a big competitor in the lager range to come in.

trader - 16 October 2014

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