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ANALYSTS predict that aggregate volumes at the country’s biggest beverage manufacturer Delta Corporation are likely to continue rising this year driven by soaring sorghum beer volumes.
However, revenues are projected to remain flat at US$576 million.
Delta reported on May 13 that its overall volumes had dropped 2 percent in the year through March 2015.
But stockbrokers IH Securities said last week the company’s sorghum beer product line Chibuku Super, which contributed 50 percent of total volumes last year, is likely to drive volumes.
“We anticipate improvement in aggregate volumes driven by increased capacity in Chibuku Super . . . however, value will continue to be affected by the lower contribution from lagers and price reductions effected across portfolios,” said IH Securities.
Consumer demand has been softening in the wake of illiquid market conditions.
Last year, Delta’s lager volumes, which peaked to 2,02 million hectolitres in 2013, declined to 1,4 million hectolitres from a year earlier.
Sparkling beverages have witnessed the same trend, with volumes rising from 770 000 hectolitres in 2010 to 1,6 million hectolitres in 2013 before declining to 1,47 million hectolitres in 2015.
A strong dollar has also spurred imports of competing beverages.
Conversely, soft drinks and sorghum beer volumes have been trekking northwards, rising 11 percent and seven percent, respectively.
Notably, sorghum beer managed to buck the downtrend experienced in 2011, jumping from 3,1 million hectolitres in 2013 to 3,71 million hectolitres in 2014.
As a result, Delta will commission a third bottling line in Bulawayo in July that will further increase capacity in the Chibuku Super.
Though the company’s operating income declined 14 percent to US$111 million last year, the group declared a final dividend of US2,3c.
Its revenues fell four percent to US$576,6 million from the comparative period a year ago.
IH securities contends that while the group’s performance is in line with the prevailing economic environment, its wide product mix enables it to hedge its volumes.
“Delta delivered a largely expected set of results for (Financial Year 2015), typically revealing the state of the Zimbabwean consumer.
“The theme remained downward migration in the value chain from higher margin product to
more affordable lower margin product offered at convenient pricing points.
“Delta’s ability to defend aggregate volumes (down two percent year-on-year) has been premised on effective product mix management that has enabled the business to capture the consumer at a variety of pricing points within value
chain.
“This will continue to be the focus going forward as management seeks to continually adapt product offering to the changing dynamics in consumer spend,” said the brokerage.
Bongani Ndlovu
Online Reporter