Delta lager volumes decline 40%; Coca Cola to renew Bottlers Agreement for 3yrs

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Beer Delta beverages lagers
Beer Delta beverages lagers

HARARE – (FinX) Delta Corporation reported a 40% decline in lager beer volume in the second quarter to September 30, a performance reminiscent of 2016 where volumes were on a free-fall. This comes as pricing issues continue to take a toll on demand although the group maintains that pricing of the lager beer category was moderated to maintain affordability.

In a trading update for the second quarter, Delta said that lager beer volumes for the quarter were down 40% and 48% for the six months compared to last year.

Overall performance across the categories was also subdued as monetary policy changes since October last year have led to a surge in inflation and a fast depreciating exchange rate. Consumer spending remains low as incomes have lagged the escalation in prices of goods and services. Lager beers retail between $18 to $20 for a brown quart, $22 to $24 for a green quart. Pints are between $10-$11 (for brown) and $12-$14 for greens.

“The company has had to implement modest but frequent price increases in response to the inflationary pressures while taking into account the affordability issues affecting consumers. There are still challenges in sourcing imported raw materials and services due to the mixed performance of the interbank market and difficulties in accessing materials as foreign suppliers remain jittery on account of overdue payables,” said the group in a statement.

Sorghum beer volumes declined 29% for the quarter and 15% for six months as consumers switched from the category due to sharper price increases.  “The prices of the major inputs; maize, sorghum and packaging materials rose ahead of disposable incomes.”

At Natbrew Zambia, the volume was 13% down for the quarter compared to last year which is partly due to higher pricing on the back of a steep increase in maize prices and the depreciation of the Kwacha although consumer acceptance of the recently launched returnable pack was encouraging.  Product supply is constrained by capacity and power supply disruptions.

Sparkling beverages volume declined 36% for the quarter and 56% for the six months. The group said volume recovered in the last quarter on the back of improved product supply and moderated retail pricing. Raw material supply remains a challenge as the category has a high import content.

At Afdis volumes were soft due to limitations in accessing and the high cost of foreign currency.  The beverages volume at Schweppes Holdings declined by 33% for the half year due to falling consumer demand arising from the pass through effects of cost push inflation.

The group did not provide the usual revenue figures as there will be a delay in the publication of the half year interim report has been deferred pending clarifications and guidelines from the Public Accountants and Auditors Board (PAAB) on the implementation of International Accounting Standard (IAS) 29: Financial Reporting in hyperinflationary economies.

Delta also said The Coca-Cola Company and AB InBev were  finalising the renewal of the Bottlers Agreement for a three-year term to September 2022.

The group declared an interim Dividend  of RTGS 6,75 cents per share payable at the close of business on 22 November 2019.

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