Delta, Varun share beverages market
DELTA Corporation’s market share in the non-alcoholic beverages market is facing serious threat from PepsiCo’s Varun Beverages which has taken on an aggressive market penetration strategy, Morgan & Co, a securities firm, has observed.
Currently, Delta’s market share in carbonated soft drinks is at 55%.
Other players in the market include Dairibord and Innscor’s Probottlers.
In its recent research findings, Morgan & Co said Varun Beverages had proved to be a threat to Delta’s sparkling beverages division through its aggressive marketing that is largely hinged on undercutting Delta’s products.
“Delta’s market share in the non-alcoholic beverages market is facing an overwhelming threat from PepsiCo’s Varun Beverages which has taken on an aggressive market penetration strategy.
“The competitor offers competitive alternatives at lower price points and has managed to maintain a steady supply of its products compared to Delta,” the report read in part.
As of last month, a 2-litre pet of Coca Cola was selling for $184,99 while Pepsi and Fizzi sold for $139,99 and $109,99, respectively.
“This has subsequently placed downward pressure on Delta’s sparkling beverages division.
“Varun Beverages is riding on its special economic zone (SEZ) status it was granted in 2018.”
The grant lasts for a period of five years and some of the benefits of SEZ status include priority access to foreign currency on the central bank auction system and a corporate tax waiver for the duration of the grant.
“We note that Varun Beverages’ SEZ status has less than two years before it expires, and this could drive recovery in Delta’s sparkling beverages market share beyond 60% after 2023,” Morgan & Co said.
Delta supplies carbonated drinks under the Coca Cola Bottler Agreement.
The company has operations in Harare and now in Mutare following its recent acquisition of Mutare Bottling Company.
Delta’s market share in carbonated soft drinks temporarily dipped to 35% in 2019 and 2020 at the height of foreign currency shortages.
Morgan & Co said the global carbonated soft drinks market was expected to register a growth rate of 4,7% in 2021, largely driven by consumers’ focus on convenience.
It said an increasing awareness on the environment and the impact of sugar on consumers’ health has driven the industry to adopt alternative sweeteners and environment-friendly packaging.
Major companies in the industry are Coca Cola and PepsiCo.
Varun Beverages has also recently entered the cordial market with the Soul Sip range.
The market is largely dominated by Delta’s associate company Schweppes (Mazoe), Dairibord (Quench) and Punch Bowl (Squish Squash).
Morgan & Co said Schweppes’s flagship brand, Mazoe, had underpinned the company’s strong market share of 60% .-newsday
