eBusiness Weekly
Nelson Gahadza
Delta Corporation says Zimbabwe’s operating environment is expected to remain complex and challenging in the face of difficult choices on economic policy, the unfolding global supply constraints, rising inflation and uncertainties of the Covid-19 pandemic.
The beverage giant is a holding company that operates a portfolio of businesses throughout Zimbabwe, with interests in beverages (manufacturing and distribution) and the agro-industrial sectors and is one of the top quoted companies in terms of market capitalisation on the Zimbabwe Stock Exchange (ZSE.
Delta chairperson, Stanford Moyo, in a statement of financials for the year ended March 31, 2022, said the 2022 cereals harvest was negatively impacted by the mid-season drought while the country will hold general elections in 2023.
“As a result, imports to fill the gap will be at significantly higher cost due to the surge in food prices in the aftermath of conflict in Europe in addition to the high shipping costs,” he said.
Moyo said there is, however, indications that aggregate demand will remain firm largely driven by mining activities, diaspora remittances and infrastructure developments.
He said the Group is undertaking an ambitious recapitalisation programme to address the capacity gaps and improve customer service.
“This is premised on our hope that the authorities will implement progressive policies in line with the national development strategy,” Moyo said.
Chief executive officer, Matts Valela, during an analyst briefing said in Zimbabwe, the multicurrency trading environment enabling improved inputs supplies and capital expenditure and spending was driven by political activity – March 2022 bi-elections.
The group which also has operations in Zambia, said there was improved economic sentiment post August 2021 general election and the recovery of Kwacha exchange rate.
In South Africa, the lifting of strict Covid-19 bans on alcohol boosted demand during the year under review.
Valela said lager beer volume for the year grew by 38 percent to 1,863 million hectolitres (HLs) compared to prior year attributed to consistent product supply with respect to both brand and pack.
“There was a significant injection of new returnable glass bottles which enabled the better utilisation of existing production capacity. The increase in the glass float allowed traders to remove the restriction to exchange bottles at point of purchase,” he said.
Valela said a new brand, Sable Lager, was launched in March 2022, to expand the mainstream offerings and offer consumers a choice of an easy drinking lager.
He noted that a new packaging plant is scheduled for installation in early 2023 to further address market supply demands.
Sorghum beer volumes in Zimbabwe grew 43 percent to 3,732 million HLS driven by improved access to market, relaxation of Covid-19 restrictions, increased spending in rural markets driven by artisanal mining and improved agricultural output.
Valela said the opening of on-premise outlets benefitting the Scud pack and efforts are underway to unlock additional production capacity for Chibuku Super plant to be installed at the Southerton brewery.
The volume at Natbrew Plc (Zambia) declined by 16 percent to 0,683 million HCL for the full year due to limited access to the market under Covid-19 restrictions and resurgence of competition from the illegal bulk beer offerings.
“The nascent volume recovery was dealt a blow following the hike in excise duty in January 2022. “There are, however, concerted efforts to stabilise the business through focused product offerings and enhanced distribution strategies,” Valela said.
He noted that United National Breweries South Africa benefited from the lifting of the alcohol ban to record a volume increase of 63 percent to 1,306 million HLS over prior year.
Valela said the focus is on accelerated volume recovery by recruiting new customers and consumers, entry into more sales channels and winning the customers back from home brews which were spurred by the alcohol bans.
The Sparkling beverages volume growth was driven by the on-going initiatives to address affordability, leveraging the returnable glass pack and consistent product supply.
Valela said the business has responded positively to the on-going initiatives to recover market share through competitive pricing, focused market execution and consistent supply of brands, flavours and packs.
He said the supply of PET packs remains constrained and will be addressed by the investment in additional capacity which will be commissioned before the end of calendar year 2022.
“Additional returnable glass bottles were injected during the year to increase availability of affordable packs. The Manicaland territory has been fully integrated, allowing the optimization of the returnable glass production capacity,” he said.
In terms of associate companies, African Distillers Limited African Distillers Limited (Afdis) recorded a 37 percent increase in volume compared to prior year driven by a strong market pull and better product supply.
Schweppes Holdings Africa Limited volume grew by 22 percent over prior year, driven by improved product supply and market recovery of the Minute Maid Juice drinks which were not available in the previous period.
Valela said juice shortages have resulted in a market under supply of Mazoe Orange Crush, the mainstay of the business.
Nampak Zimbabwe witnessed sustained strong demand across its business sectors with the packaging divisions being buoyed by the volume recovery in the beverages sector.
Valela indicated that there are some challenges in sourcing key raw materials such as resins and tinplate from the international markets and the Covid-19 related disruptions to international shipping and freighting.
Group Finance Director, Alex Makamure, said revenue for the year grew 58 percent to $110,16 billion compared to $69,550 billion in 2020 driven by volume growth across
all business units, changes in product and portfolio mix and replacement cost based pricing.
Makamure said during the year, the cost structures were distorted due to the rebasing of costs in US$, easing of Covid-19 related austerity measures on most cost lines and the catch-up maintenance benefiting from improved access to foreign currency.
He said there was also increased business activities post Covid-19 restrictions in marketing, distribution sustainability programs as well as increases in global commodity prices of fuel, sugar and packaging.
Makamure noted that other regional businesses are still loss making but have improved outlook.
