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Zimbabweans are drinking less fizzy drinks as forex crunch hammers Zim’s Delta Corp

Consumption of soft drinks in Zimbabwe has gone down after the country's biggest beverage manufacturer recorded a 44% decline in volumes. Pic: Armand Hough

Consumption of soft drinks in Zimbabwe has gone down after the country's biggest beverage manufacturer recorded a 44% decline in volumes. Pic: Armand Hough

Published May 17, 2019

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HARARE - Consumption of soft drinks in Zimbabwe has gone down after the country's biggest beverages manufacturer recorded a 44% decline in volumes for fizzy drinks although there has been competition from a new bottler of Pepsi products in the country.

Delta Corporation, a unit of ABIn Bev, has cited foreign currency constraints and has had to reduce prices for soft drinks to prop up demand. The company has also battled with the government over price increases amid rampaging inflation in Zimbabwe which has shot up to about 75% for the month of April, according to Zimstats.

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Canaan Dube, chairman for Delta Corporation, which is a unit of ABIn Bev, said on Thursday that “Sparking beverages volumes declined by 44%” in the full year period to end March.

“The growth registered in the first half of the financial year was reversed by the lack of product in the second half. The division was adversely affected by severe foreign currency constraints,” he said.

Zimbabweans endured a festive season without their favorite soft drinks in December 2018 and January 2019. Most beverage consumers had to do with cheap brands imported from Mozambique as well as flavours from Pepsi which are being bottled by Barum Beverages in Harare.

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According to Dube, Delta Corp’s soft drinks division was “virtually closed in the last quarter of the year due to critical raw material outages” owing to foreign currency shortages. Delta manufacturers and distributes fizzy drinks under licence from The Coca Cola Company which is being engaged to help “restore normal operations”.

Although the soft drinks division dipped, the lager beers segment of Delta Corp registered volume growth of 31% for the year while the sorghum based Chibuku category also saw demand outstrip production capacity. This has prompted Delta Corp to start work on building a new brewery at Rusape, in the Manicaland Province.

However, the board of Delta Corp has said that it is concerned about the company’s ability to access foreign currency to meet its external obligations. Said Dube: “We have outstanding foreign creditors and loans, the bulk of which is overdue.”

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Earnings before interest and tax for the period jumped 60% in local currency to RTGS$175.5 million (around US$53 million using the interbank market rate) “driven by the domestic beer” category. 

The group’s forex exposure of about US$85 million – accounted for in short term and long term payables – has remained worrisome for executives at the company owing to the instability of the local currency unit and ongoing constraints in accessing foreign currency.

BUSINESS REPORT 

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Forex

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