By Jonathan Mbiriyamveka
A new Chibuku Super plant is being installed at Harare brewery for commissioning in early 2023.
In a First Quarter Trading Update, Delta Corporation company secretary Faith Musinga said the Chibuku Super has been constrained by the limited production capacity.
“The Sorghum beer volume in Zimbabwe grew by 14% for the quarter compared to prior year, driven by the standard Chibuku (Scud) product.
“The category continues to benefit from the increased social activities as we celebrate the Chibuku brand’s 60th anniversary,” she said.
“There is renewed focus on expanding the consumer choice. The Chibuku Super Banana flavour was launched in June 2022 and is exciting the market.
“The volume at Natbrew Zambia remains under pressure, declining 9% for quarter, in the aftermath of the price increases implemented in January 2022 in response to the hike in excise duty. There are signs of recovery, which will be assisted by the broadening of the product offering, revamping of the route to market and exports of Chibuku Super into the region.”
United National Breweries South Africa recorded a volume growth of 13% for the quarter despite the setbacks from the adverse weather in some markets.
“Progress is being made in accessing additional market channels, new products and pack innovations and winning consumers from home brews,” Musinga said.
Group revenue grew by 55% for the quarter in inflation adjusted terms compared to growth of 283% in historical cost terms.
“This reflects the volume growth and the replacement cost-based pricing. Whilst the Zimbabwean entities continue to generate sufficient foreign currency through domestic sales, there are concerns about increased policy risks given the frequent legislative changes.
“The business remains cash generative with the cashflows supporting the capital expenditure programs and to build stock covers ahead of the coming peak season,” she said.
She noted the trading environment during the quarter under review was characterised by increased social and economic activity as the COVID-19 restrictions and curfew times were progressively relaxed.
“The regional economies are being impacted by increases in global inflation, a surge in fuel prices and disruptions to international shipping which are driven by the COVID-19 impacts and the Russia/Ukraine war,” she said.
“The Zimbabwean economy is witnessing a resurgence of inflation driven by an unstable exchange rate and various interventions which give rise to more frequent ZW$ price increases. The management of the exchange rate remains an area of opportunity.”
“Consumer spending remains high reflecting faster velocity of the local currency and spurred by increased mining activity, infrastructure projects, marketing of commercial crops and payments of wages and salaries in foreign currency.
“Demand is however being constrained by the low disposable income in certain consumer groups,” Musinga said.
The focus, she said, would be on business continuity in the face of rapid policy changes, rising global and local inflation and the uncertainties posed by the COVID-19 pandemic.
“The country will require additional foreign currency to fund the cereals deficit arising from mid-season drought.
“The disparities in the exchange rate prevailing in Zimbabwe and lack of clarity in the legislation relating to currency of payment of certain taxes creates significant uncertainties and business risks.
“The business remains poised to exploit opportunities from activities that generate aggregate demand such as the infrastructure development projects, mining activities and diaspora remittances.
“The Group is undertaking an ambitious recapitalization programme to address the capacity gaps and improve customer service,” she said.
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