Zimbabwe: Delta Corporation to remodel sorghum beer factories

Beverages maker Delta Corporation will remodel its sorghum beer factories to enhance production of the new 1.5 litre pack, as it moves to boost both volume and revenue contribution for the segment. The 1.5 litre pack, which is expected to flood the market by year end, is replacing the 2 litre pack, also known as a scud. Management at Delta says the new 1.5 litre is expected to drive volumes for the sorghum beer segment, which experienced a volumes contraction in the half year to September 30, 2017, The Herald reported on November 16.

“The 1.5 litre is doing very well; it is only capacity that is still a challenge,” said Delta chief executive officer Pearson Gowero in an interview on the sidelines of the group’s financial results presentation.

“We now have to re-kit all our factories to produce the pack (1.5 litre) from the 2 litre, but due to the hard currency delays, there is a bit of a delay. We think before the end of this year it will be everywhere,” said Gowero.

This comes as the sorghum beer volumes fell 4 percent in the period to September 30, 2017 to 1 826 million hectolitres compared to 1 903 million during the same period last year. Its total gross sales for the period were $1 million weaker to $96 million in the period as the market battled low disposable income and cash shortages affecting consumption especially in the rural areas.

Total operating income for the sorghum beer segment was 14 percent lower to $16.8 million from $19.6 million in the same period last year. Gowero indicated that although there was a general improvement in consumer disposable incomes driven by increased production in agriculture and small scale mining, the rural markets still remained a challenge due to cash shortages. Electronic payment platforms have only been prevalent in urban areas, leaving the rural folk – a significant portion of the sorghum beer market – stranded.

“Consumption in rural markets has improved but it is still constrained by transactional challenges,” said Gowero. Generally, constrained payment methods and continued depressed disposable incomes have negatively impacted the overall volumes growth. Delta’s total revenue for the half year under review grew by a marginal 1 percent spurred by higher lager volume. Although sorghum beers have higher contribution in terms of volumes, their impact to revenue has been diluted due to their relatively lower value.

Despite the volume decline, the Chibuku Super’s contribution to sorghum beers is at 60 percent and management expects that the launch of the 1.5 litre pack will further impact both volume and revenue from the third quarter. The commissioning of the new Chibuku Super plants has also increased production capacity for the sorghum beer segments.

16 November, 2017