Reginald Sherekete
Friday, 29 July 2011

Zimbabweans like their beer

THE chips might be down for most Zimbabweans given the state of the economy but when it comes to beer drinking, the only way is up.
So great has been demand from the nation’s imbibers that leading lager manufacturer Delta Corporation is struggling to keep pace and is now considering installing yet another new beer packaging plant by July 2012 to meet strong lager demand.

This is despite the company commissioning two lager packaging lines in Harare in October 2009 and another in Bulawayo in November 2010, which significantly improved supplies.

“Lager beer demand has continued to outperform budget levels,” CEO Joe Mutizwa told an annual general meeting yesterday.

In the quarter to June 2011, lager beer volumes increased by 28% against a budgeted 16%.

Zimbabwe’s booze per capita consumption is around 14 litres against South Africa’s average of 7 litres, but is still lower than Botswana’s at 32 litres and Namibia at 50 litres.

Traditionally, the third quarter to December is the highest performer in terms of volumes performance since it coincides with the festive season, but in the first quarter this year, Zimbabweans, who seem anxious to catch up with their colleagues in the region, had by June outstripped the peak demand by 2,8%.
“We now have a scenario of two peaks ,” Mutizwa observed.

But no need to worry, Zimbabweans aren’t busy sloshing themselves at the expense of work, as tends to be the case in Botswana. Mutizwa attributes the increase in beer consumption to improved performance in agriculture were the tobacco, maize and cotton season registered improved output, which translated to increased disposable incomes to farmers.

Delta says it currently has a 97% market share in the lager business and says it has managed to curtail competition from imported brands like Amstel, Heineken and Windhoek lagers.

Volumes performance outperformed expectations across the board, with overall volumes of the company increasing by 27% to 1 670 000 hectolitres as compared to 1 318 000 hectolitres in the same period last year.

Revenue performance was up 42% to US$144 million in the first quarter and steadily averaged US$48 million per month, a figure that outperformed expectations as solid volumes were only expected in the month of April characterised by numerous holiday breaks.

In the quarter to June, earnings before interest and tax (EBIT) was US$17,7 million, up 44% to the prior period.

The EBIT margins were 17,14% compared to a budgeted level of 17,5%. Management says it actively containing the fixed costs and production overheads. Attributable earnings stood at US$12,8 million.

Delta has a branch in Victoria Falls