South Africa: Delta to commission new sorghum beer plant in South Africa

Zimbabwe Stock Exchange (ZSE) listed beverages maker Delta will commission a new Chibuku Super plant for its South African subsidiary, United National Breweries, during the fourth quarter of this year, The Herald reported on November 14.

The beverages giant indicated optimism on the strong demand for the sorghum beer segment South of Limpopo River with the product now available in formal retail chains, albeit the challenging environment characterised by power outages, weakening Rand, and low disposable incomes.

However, there were delays in the delivery of machinery for the plant, which the group now anticipates receiving soon and commencing production in the fourth quarter.

“There was a delay in the shipment of the equipment for the local production of Chibuku Super, which is now rescheduled to the fourth quarter,” said the group in a performance update for the half year to September 30, 2023.

Figures from Delta show that United National Breweries South Africa recorded a volume growth of 2 percent in the second quarter and is flat on prior year for the six months.

“The uptake of Chibuku Super is promising, which is supported by the entry into a number of formal retail chains,” said Delta.

According to the group, South Africans consumed 779 000 hectolitres of the opaque beer during the period compared to 780 000 in the prior year. In Zimbabwe, volumes grew 4 percent to 2 173 000 hectoliters compared to 2 084 in the comparable period.

“The new Chibuku Super plant at the Harare Brewery was commissioned at the end of September and will contribute to volume in the second half of the year.

“This investment will assist in closing the supply gaps in both the domestic and regional markets,” said Delta.

In Zambia, Natbrew paced the fastest in the sorghum beer segment with a 67 percent jump to 647 000 hectoliters. Despite the volume growth, the Zambian unit’s financial performance was adversely impacted by rising costs, especially the price of maize.

“The volume recovery at Natbrew Plc (Zambia) continued, recording a growth of 67 percent for the six months, driven by Chibuku Super and returnable packs and increased market penetration. The financial performance has been negatively impacted by the steep rise in maize prices and cost increases on imported materials,” said Delta.

In terms of financial performance, revenue increased by 164 percent to $1,9 trillion in inflation-adjusted terms compared to a growth of 879 percent in historical cost terms and 9 percent in US dollar terms.

This reflects the volume growth across business units and the increased proportion of foreign currency sales to over 80 percent. According to the group, there was an increase in the proportion of domestic transactions settled in foreign currency.

The earnings before interest and tax (EBIT) grew by 153 percent to $408 billion in inflation-adjusted terms compared to 784 percent in historical cost terms and an indicative growth of 10 percent in US dollar terms.

14 November, 2023