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Martin Kadzere Senior Business Reporter
DELTA Corporation, the country’s largest brewing firm says it will spend at least $20 million to set up an additional two Chibuku Super plants to meet growing demand of the product.
The company’s sorghum beer segment —which comprises Chibuku Super and Scud —recorded a 12 percent decline in volumes for the half year ended September 30, 2015, but revenue was up one percent due to a change in the product mix in favour of Chibuku Super.
The continuing squeeze on disposable incomes in an economy faced with liquidity challenges has seen consumers shifting to cheaper opaque beer than the premium priced lagers.
Chief executive Mr Pearson Gowero said the company has identified three sites in Manicaland, Midlands and Masvingo provinces where the factories would be set up.
“We will accelerate additional capacity in Chibuku Super and we will set two more factories at a cost of not less than $20 million to improve the availability of the product,” said Mr Gowero after the presentation of the company’s financial results.
Earlier, he had told analysts that the plants would be operational by August next year.
He said the “capacity issues” of the plants were being finalised. The geographical spread of the factories will help the company to significantly cut distribution costs as supplies are currently coming from its factories at Fairbridge in Bulawayo and in Chitungwiza.
Delta, whose major shareholder is SABMiller, which owns about 40 percent of the company produces 3,5 million hectoliters of Chibuku Super per year at its operating plants.
SABMiller has received a $100 billion-plus takeover offer from the world’s biggest brewer Anheuser-Busch InBev. AB InBev is hoping SABMiller will give it a foothold in growing African markets.
Overall, revenue for the period fell 8 percent to $269 million due to volume declines and recent price cuts. Profit fell to $36 million, down from $45 million last year.
Mr Gowero said the company would reduce price of some of its products to spur demand.
“The benefits from strategies to address affordability and stimulate volumes through price reduction should filter through in the medium term,” Mr Gowero said.
Larger volumes marginally declined 2 percent, helped by price reduction effected early this year. Soft drinks volumes fell 15 percent on increased competition from imports.
The beverages maker said it does not anticipate any major improvement in the operating environment during the remaining part of the financial year.
The company said it will focus on measures to grow revenue and reduce costs. Delta will pay out $17 million to shareholders after declaring a dividend of $1,40 per share.
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