Delta sales volumes drop

Business Reporter
DELTA Corp, Zimbabwe’s largest listed company said volumes for the first quarter ended June declined on weak consumer spending largely due to liquidity constraints.

The company recorded decline across all its categories, including sorghum which traditionally has been enjoying growth. Lager volume dropped by 8 percent compared to the same quarter last year, but reflected a deceleration in the rate of decline.

This was due to price reductions implemented by the company early this year. Soft drinks volumes decreased by 15 percent compared to the same quarter last year.

“The downturn reflects weak underlying demand and the consumer preference for lower priced alternative offering,” the company said.

“The Maheu and dairy beverages recorded a decline of 11 percent for the quarter partly due to some production related outages.

The sorghum beer category recorded a volume drop of 12 percent for the quarter.

“Chibuku Super recorded strong growth which was restricted by available capacity,” said Delta.

“The installation of the new Chibuku Super production facility at Fairbridge in Bulawayo is expected to ease product availability.”

Delta is spending $17 million on the Bulawayo plant to keep pace with the growing demand.

The company is currently brewing Chibuku Super at its plant in Chitungwiza but the two lines at the plant, with capacity of 600 000 litres per day cannot keep pace with the demand.

Delta started with an initial $6,5 million investment into Chibuku Super in 2013 and followed that up with an $12 million a year later to triple production to 1,8 million litres.

Overall, revenue is down 8 percent, a reflection of both weak demand and price reductions.

Analysts said the update from Delta is reflective of the continuing squeeze on disposable incomes in a shrinking economy. Even when prices of goods are generally declining, consumer expenditure has not grown due to low disposable incomes.

“People are becoming selective of what they buy. Items like beer, particularly the premium priced lagers, will not rank at the top of the list. Bread and butter issues come first,” said one analyst.

Being a consumer facing stock and being Zimbabwe’s biggest company, the declines in revenue and lager consumption “depict a story much bigger than the firm itself.”