Little cheer for Delta as beer sales drop

Markets
Delta Beverages reported a 3% dip in revenue for the third quarter to 31 December due to a softening market that is symptomatic of falling economic activity

HARARE – Zimbabwe’s largest brewer, Delta, on Friday reported a 3% dip in revenue for the third quarter to 31 December due to a softening market that is symptomatic of falling economic activity and disposable income.

Delta Corporation, 38% owned by global brewing giant SABMiller, however, said revenues were 2% higher over the nine months to December 31, in line with expectations.

“The country is witnessing a significant slowdown in consumer spending and weak economic activity. This was particularly pronounced in this quarter, the traditional holiday peak period,” Delta said in a trading update.

Zimbabwe’s economy grew by nearly double digit figures from 2009 to 2011 under a unity government between President Robert Mugabe and opposition leader and former Prime Minister Morgan Tsvangirai of the Movement for Democratic Change.

But it suffered a sharp slowdown in 2012 and in the run-up to the elections in July last year which were won by President Robert Mugabe and his Zanu PF party, extending his 33-year rule by another five years.

The government expects a 6,1% gross domestic product growth this year, but the World Bank says a more modest 4,2% is more likely due to a slowdown in key sectors.

Delta said total beverage volumes were flat against the same period last year as weak economic activity and lower consumer spending took their toll, although they were 2% up for the nine months.

Lager beers were 25% down on the prior year and 15% for the nine months, which Delta attributed to price distortions caused by an increase in excise duty in December 2012.

Sparkling beverages were 6% down on the quarter, but 2% higher over nine months.

Its bright spot was the sorghum beer, which recorded an 18% growth for the quarter and 12% in the nine months driven by the success of Chibuku Super brand. Maheu sales were up 23% in the quarter and 42% in the comparative nine months.

– The Source.