Delta records 19% revenue growth
The country’s largest beverages maker, Delta Corporation posted a 19 percent revenue increase in the fourth quarter of 2023 in US Dollar terms compared to the prior year growth of 12 percent for the nine months.
This reflects the volume growth across business units, with the proportion of US Dollar sales averaging above 70 percent for the year.
Company secretary Faith Musinga said the firm is angling for growth opportunities noting that recent capital investments will ensure improved product supply and enhanced operational efficiencies across the business segments.
“The focus remains on exploiting opportunities from activities that generate aggregate demand, whilst reducing the headwinds from global issues and an unstable policy environment,” she noted.
Commenting on the lager beer business, she said it maintained the volume growth momentum and has surpassed historical monthly peak volumes to achieve a growth of 15 percent for the quarter and 14 percent for the nine months compared to prior year.
She noted that the new packaging line commissioned in August 2023 has assisted in stabilising overall product supply, with further benefits from the injection of returnable glass, a stable supply of key raw materials and a reliable manufacturing platform.
“The focus remains on aligning brand and pack availability to demand and optimising the route to market. Our brands remain active in the market, through sponsorships of sport and culture and other worthy causes.”
In Zimbabwe, the sorghum beer segment, the total volume inclusive of exports grew by three percent for the quarter and is up to four percent for the nine months, off a high prior year base.
Volume, however, declined by five percent for the quarter in Zimbabwe as the category was impacted by the improved availability of lager beer.
In the quarter under review, the Chibuku Super Plant at the Harare Brewery was commissioned and has assisted in stabilising product supply for both the domestic and regional markets.
The wines and spirits unit, African Distillers (Afdis) registered a sluggish performance in the quarter with volume declining by 12 percent compared to prior year due to an increase in grey trade on key brands and reduced uptake by the formal trade partners due to account management issues and distorted pricing.
Delta said product supply was adversely affected by plant breakdowns and utility supply disruptions.
However, Schweppes Holdings recorded a volume growth of 16 percent over prior year for the quarter benefiting from the commissioning of the new plant supplying bottled water and Minute Maid Juice Drinks in November 2023.
Musinga noted that the sugar tax will result in price increases which will consequently impact the volume recovery efforts.
In another move aimed at addressing health concerns and boosting government revenue, the treasury has been allowed to implement a sugar tax of US$0,002 on non-water liquids.
While this initiative is geared towards promoting healthier beverage choices, it is also stirring discussions within the business community, particularly among stakeholders in the sugar and beverage industries.
The tax, equivalent to US 7 cents per can of sugary drinks such as Coca-Cola, has significant implications for the sugar industry.
Manufacturers, in response to the sugar tax, find themselves at a crossroads where they must decide whether to absorb the additional cost or pass it on to consumers through price increases. This dilemma raises questions about the potential ripple effects on consumer behaviour.
Finance, Economic Development and Investment Promotion Minister, Prof Mthuli Ncube defended the tax saying: “I want to emphasise that the introduction of the sugar tax on non-water liquids is a crucial step towards addressing the health challenges posed by excessive sugar consumption in the country.
“This tax is specifically earmarked for a cancer fund, reflecting our commitment to combating the adverse health effects associated with sugary drinks.”
Treasury notes that revenue generated from this tax will be directed towards acquiring much-needed hospital machinery and critical drugs to enhance our healthcare infrastructure.
By establishing a dedicated fund, the Government aims to contribute significantly to the fight against cancer and improve the overall healthcare landscape in the country.
https://www.chronicle.co.zw/delta-records-19-revenue-growth/