ZIMBABWE’S largest beverage manufacturer, Delta Corporation, recorded 24% revenue growth driven by its beer business, while soft drinks volumes were down 26% in the nine months to December.
By Freeman Makopa
In a trading update, the company reported that the soft drinks business was affected by the lack of foreign currency to import raw materials.
Early this year the company announced that it would sell its products in foreign currency, but rescinded the move after government intervened.
“Delta’s revenue increased by 5% for the quarter and 24% (19% organic) for the nine months reflecting the growth in beer business which was weighed down by depressed outturn in soft drinks,” the company said.
“The sparkling beverages volume declined by 66% compared to the prior year for the quarter and decreased by 26% for the nine months. There were extended production stoppages arising from limited access to foreign currency required for importing key raw materials and failure to clear arrear payments to the Coca-Cola Company.”
Delta said the current operating environment was still constrained by foreign currency shortages, a situation likely to remain in the near future.
“The economy experienced resurgent inflation spurred by the market reaction to the changes in the monetary and fiscal policies announced in 2018. This triggered price hikes premised on factoring in foreign currency premiums,” Delta said.
Lager beer volumes grew by 27% over the prior year for the quarter and was up 43% for the nine months.
The lager beer division is less depended on forex than the soft drinks unit.
Delta said it had endeavoured to meet high consumer demand in spite of challenges in accessing imported raw materials and services.
Sorghum beer volume grew 15% compared to the previous year although there were supply gaps due to shortages of packaging material and plant breakdowns as a result of scarcity of foreign currency.
The beverage maker requires between $60 million to $75 million to meet foreign obligations annually and has been struggling to get this allocation from the central bank.
The company owes foreign suppliers $41 million and it has also been failing to remit dividends to its foreign shareholders Anheuser-Busch InBev (AB InBev).
However on Thursday, Anheuser-Busch InBev and Delta agreed to place $120 million, due to them in unremitted dividends, into Reserve Bank of Zimbabwe savings bonds.