E-Malt.com News article: Zimbabwe: Delta Beverages to reopen two sorghum beer breweries

Delta Beverages, Zimbabwe's largest brewer, plans to re-open two sorghum beer breweries which were closed last year, the Financial Gazette's Companies & Markets reports.

The beverages group, which also makes an assortment of carbonated soft drinks, would resume operations at its Chinhoyi and Chiredzi breweries before the end of the year.

The development was confirmed by Delta's company secretary, Alex Makamure, who told the newspaper that the two plants would operate intermittently to cover traditional peak demand periods.

"The plan is to run Chinhoyi and Chiredzi breweries intermittently to cover traditional peak demand periods such as forthcoming agricultural harvest and the Christmas season," said Makamure.

"This will ensure that we close all supply gaps and optimise on distribution performance. This is part of the rationalisation of production capacity taking into account the advent of Chibuku Super and the trends in the Chibuku volume."

Currently, sorghum beer, also known as opaque beer, is being brewed at the Chibuku super plant in Chitungwiza and next month a new plant will be commissioned at Fairbridge near Bulawayo.

Delta, an associate of global brewing giant SABMiller, also operates 'scud' beer facilities in Harare, Rusape, Masvingo, Kwekwe, and Kadoma.

The company is expected to ramp up sorghum beer output to 350 million litres per year when it commissions its US$17 million Chibuku Super plant at Fairbridge next month.

Fairbridge brewery will produce both super and standard Chibuku. The plant will augment supplies currently coming from a plant in Chitungwiza, which produces 600 000 litres per day.

Once the new Fairbridge sorghum beer plant, designed in Germany, is brought on line, the company will close the supply gap on the market for the increasingly popular beer brand.

Delta currently serves the entire country with its Chibuku Super from its plant in Chitungwiza but the two lines at the plant cannot cope with demand.

Fairbridge brewery would supply the southern region including parts of Midlands and Masvingo provinces, complementing the supplies from Chitungwiza.

Nationally, Delta has recorded higher sales for sorghum beer.

The low-cost, mass market sorghum beer is key to the growth of the group's revenue as it turns to markets previously dominated by informal players in the face of slowing clear beer volumes.

In its audited financial results for the year to March 31, Delta reported a decline in sales volume and value decelerated in the last half of the year following price reductions that improved affordability.

The company said an excise duty rate reduction from 45 percent to 40 percent by government as from January 1, 2015 helped stem declining demand.

Sorghum beer sales were up eight percent on prior year driven by Chibuku Super with the brand attaining a 50 percent contribution by March 2015.

The maheu and dairy mix beverages were up 11 percent in the year with the category expected to benefit from the additional production capacity commissioned in October 2014.

Earnings before Interests, taxes, depreciation and amortization (EBITDA) decreased by 10 percent to US$143,2 million.


26 June, 2015