Zimbabwe: Delta Corporation continues to reel under worsening economic conditions

SABMiller’s associate unit in Zimbabwe, Delta Corporation, continues to reel under worsening economic conditions in the country, with a dollar crunch and weak consumer spending patterns forcing downwards lager beer volumes for the quarter period to the end of September, Independent Online reported on October 18.

Delta will become a unit of an enlarged entity following the merger of SABMiller and Anheuser-Busch InBev. The deal is expected to be finalised this month and the Zimbabwean unit has said that it does not anticipate any material changes from the amalgamation.

It has, however, reeled under the heavy saddle of Zimbabwe’s economy, which has been worsened by a biting cash crunch that is disrupting operations and curbing consumer spending power.

The difficult economy in Zimbabwe has also occasioned a shift in alcohol consumption patterns, with experts saying consumers are now trending their options downwards.

Cash shortages in Zimbabwe have also forced Delta to delay the commissioning of two new plants in Kwekwe and Masvingo as outbound remittances from Zimbabwe take longer to effect.

The company now anticipates that the new plants will start contributing to production before the end of this year.

“The shortages of foreign currency resulted in reduced importation of consumer goods leading to an increase in demand for some of our product lines,” Delta said on October 17.

Its soft drinks division performed better in the quarter to end-September, with volumes up 3 percent on the prior contrasting period.

However, on a half-yearly basis to the end of September, the division was down by 3 percent.

Traders on the Zimbabwe Stock Exchange said Delta's stock was among those in which foreign investor dealings had remained vibrant.

The sorghum beer category - under which the opaque Chibuku and Chibuku Super variation fall - has also performed well for the company.

Volumes for the sorghum category were up 4 percent on the quarter and a significant 6 percent on a half yearly basis.

However, the lager beer volumes declined by 7 percent for the quarter period and were also down 11 percent on the half yearly basis on the back of depressed consumer spending patterns.

18 October, 2016