Staff Writer
The beverage sector, in particular, and indeed the broader market, have been affected by the sugar tax and restrictions on route-to-market strategies.
In its trading update for first Quarter ended 30 June 2024, Delta Corporation Limited Company Secretary Ms Faith Musinga said there were ongoing engagements with the government aimed at addressing disparities impacting competitiveness caused by the sugar tax compared to regional peers.
She said the full effects of lower mineral prices and reduced agricultural output due to the El Niño induced drought were yet to be fully realised.
“Ensuring the availability of foreign currency to support imported inputs will be crucial for sustaining the industry. We hope that complementary measures will be introduction,” Ms Musinga said.
Sorghum beer volume in Zimbabwe declined by 10% for the quarter compared to the previous year.
“This reduction was due to the cessation of exports to regional markets following the completion of capital projects in those countries and the onset of the drought.
“The category is also impacted by competition from hard spirits, our own increased lager beer supply, and investments by competitors in the same category. The sorghum beer category is the most affected by the drought due to lower consumer disposable incomes in rural markets and cost pressures on key cereals such as maize and sorghum,” Ms Musinga said.
Volume at Natbrew Zambia declined marginally by 2% due to setbacks related to power and water supply disruptions and prolonged plant breakdowns.
The Sparkling Beverages volume grew by 11% for the quarter, benefiting from a delay in the implementation of the sugar tax-induced price increases and intense marketing campaigns.
“Generally, the sector’s competitiveness has been affected by the relatively higher sugar tax, resulting in increased informal imports of similar offerings from neighbouring countries
“Schweppes Holdings Africa Limited recorded a volume decline of 12% for the quarter, primarily due to significant price increases resulting from the sugar tax, which particularly affected cordials.
“The sector is further weighed down by a surge in informal imports of the flagship Mazoe Orange Crush from regional markets, driven by the price disparity created by the new tax.
“Volume was also impacted by disruptions in the route to market arising from the fiscal regulations,” Ms Musinga said.
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