Delta volumes surge on improved demand

DELTA Corporation says volumes for the interim period to September 30, 2021, grew across all segments with the soft drinks segment leading the volumes growth largely driven by improved consumer disposable incomes and relaxed trading conditions.

The group’s chief executive, Matlhogonolo Valela, said the volume growth was achieved despite packaging supply problems that saw shortages of polyethylene terephthalate (PET) drinks and some non-returnable glasses (NRG) bottles.

“In the soft drinks segment, sparkling beverages led the volume growth with a 95 percent increase to 584 Hectoliter (HLS) from the prior year to September 31, 2021. Alternative beverages came in with volume growth of 80 percent to close the period to September with volumes of 36 HLS,” Valela said during an analyst briefing on Tuesday.

He said the volume growth of sparkling drinks was due to on-going initiatives to address affordability, leveraging the returnable glass pack and consistent full product supply.

Valela said the increased contribution of immediate consumption offerings driven by affordable glass packs and improved flavour range gave wider choice to consumers, further driving volume.

During the period under review, Lager beer volume grew by 57 percent to 872 HLS compared to the same period last year, attributed to competitive pricing and consistent product supply with respect to both brand and pack.

“The ongoing injection of additional returnable glass bottles has resulted in increased product supply and allowed traders to remove the restriction to exchange bottles at point of purchase,” he said.

He added that the business continued to benefit from the opening of more trade channels as the Covid-19 restrictions were eased.

In Zimbabwe, the sorghum beer segment recorded a significant jump in volumes by 68 percent to 1,834 HLS sold compared to prior year.

Valela said this was despite the curtailed distribution into rural markets and limited access to some key trade channels such as bars and beer halls that remained inaccessible under Covid-19 lockdowns and curfews.

“There are cost pressures in the sector arising from rising prices of plastic packaging and fuel,” he said, adding that there are ongoing efforts to unlock additional production capacity for Chibuku Super.

The volume at Natbrew Plc (Zambia) declined by 22 percent for the six months due to the limited access to the market under Covid-19 restrictions and resurgence of competition from the illegal bulk beer offerings.

United National Breweries South Africa benefited from the lifting of the alcohol ban to record a volume increase of 118 percent over prior year. Valela said the business is implementing volume recovery initiatives with a focus on recruiting new customers and reinvigorating the product offering.

Schweppes benefited from improved supply of both Minute Maid juice drinks and cordials together with affordable pricing which drove volumes in the period under review. The higher demand of fresh fruit in the international markets resulted in lower intake of juicing fruit creating a need to import juice for processing.

Nampak as an associate was benefiting from improved volume performance from the beverages sector despite facing huge constraints in sourcing of raw materials such as resins and tinplate. The associate has also been affected by the global commodity cycles which have placed cost-push pressure on value chains.

“We have seen crude oil prices rise by 68 percent during the period under review and this has in turn resulted in higher fuel prices leading to viability costs to rise” , said Group finance director, Alex Makamure.

Makamure said group revenue increased by 71 percent to $33,59 billion with Larger and sorghum beer contributing 38 percent each to revenue.

Sparkling beverages and wines and spirits made significant contributions of 15 percent and 8 percent respectively.
He said operating income increased by 5 percent to $6,44 billion, which was affected by the easing of lockdowns which needed more money to guarantee safety to employees and customers.-eBusiness Weekly