Tawanda Karombo Harare

REVENUE and volumes for the half year to the end of September of Zimbabwe’s Delta Corporation had taken a knock from declining disposable incomes blamed on economic hardships, the associate unit of SABMiller said yesterday.

However, analysts expect the global brewer to report stronger volumes from its other Africa operations. This is expected to offset slow growth in markets such as South Africa – where growth for the half-year period is expected to be a marginal 1 percent – as well as sluggish volumes in Australia and Latin America.

Zimbabwe and Zambia are two African markets that are struggling to show volume growth in SABMiller’s lager beer category. Zambia “could still be a substantial drag on volumes due to the January excise tax increase”, analysts at Renaissance Capital said in a note on the company last week.

Delta will publish its consolidated results for the half-year period on November 13 and these are expected to show a 4 percent decline in revenue. The company recently cut prices for its lager beer products, while African Distillers – in which it is a stakeholder – has also announced price cuts for its cider products.

Experts said this was expected to lift some of the pressure on consumers and stimulate demand, which could lead to increased volumes. Delta, which has a market capitalisation of about $1.6 billion (R17.8bn), is the dominant beer producer in Zimbabwe.

SABMiller’s African operations were expected to have grown 3.2 percent during the half-year period to September, propped up by “double-digit growth” in markets such as Nigeria, as well as enhanced “capacity expansion and improved volumes” in Tanzania, Mozambique and Uganda, Renaissance Capital analysts said.

Delta, in which SABMiller has a stake of about 37 percent, said yesterday that the general economic performance in Zimbabwe “remains depressed, with significant pressure on consumer disposable incomes”.

This had forced lager sales volumes to decline 29 percent in the second-quarter period and 25 percent in the half-year period.

The pressure that the struggling economy is exerting on consumer spending has resulted in a shift in beer consumption patterns. But its Chibuku opaque alcoholic beverage, which is aimed at the lower end of the market, is still performing well.

“The sorghum beer category continues to record growth, up 12 percent for the quarter and 14 percent above the prior year for the six months. Chibuku Super has been rolled out nationally and is driving the overall category performance,” the company said.

The soft drink category, comprising sparkling and other non-alcoholic beverages, declined by 6 percent for the six-month period compared with last year.

Delta said it had since implemented “further interventions to stimulate volume and grow value”, while the “excise duty increase effected in December 2012 has continued to limit the affordability of Delta’s products” for the period under review.