Election spend subdued, says Delta

Zimbabwe beverage manufacturing giant, Delta Corporation (Delta), says a significant portion of sales is now going through informal channels while at the same time, the company has not enjoyed the largely anticipated election spending.

This was said by Delta’s chief executive officer, Matlhogonolo Valela, while giving a trading update at the company’s Annual General Meeting last Friday.

He said; “It is important to note that the formal retail space is fairly distorted at the moment with volumes going to the informal sector and therefore the outcomes are not as what we had expected.

He also said despite having elections this year, the company currently faces low consumer spending compared to the previous election seasons.

“We have an election this year. We have seen a fairly subdued political activity and limited spend, not in keeping with the elections in years passed.

“We want to hope that opportunities are still coming for more spend in that area for us to bank the election fever,” said Valela.

In a trading update for the first quarter ended 30 June 2023, Delta highlighted that the exchange rate volatility, coupled with fluctuations in market liquidity in both foreign currency and Zimbabwean Dollar, continue to create challenges for the formal sectors of the economy, particularly as it relates to the pricing of goods.

During the quarter, the company said it witnessed a 12 percent growth in larger beer volumes compared to the prior year and the company expects product supply to improve following the recent commissioning of a new bottling line at the end of the quarter under review.

Delta said a new plant, Chibuku Super plant, which is expected to improve product supply in the market, will be commissioned during the second quarter of the current financial year.

“The new Chibuku Super plant being installed at Harare Brewery, is scheduled for commissioning during the second quarter of the current financial year. This will close the product supply gaps and contribute to the regional supply grid,” said the Delta.

In terms of its financial performance, Delta said group revenue grew by 163 percent for the quarter in inflation – adjusted terms compared to a growth of 929 percent in historical cost terms, driven by the growth in volume.

The beverage manufacturer also said the revenue in US Dollar terms, grew by 10 percent during the quarter compared to the prior year.

“The Zimbabwean entities continue to generate sufficient foreign currency through domestic sales with average collections of over 80 percent, which reflects the constrained ZWL liquidity and trading challenges affecting formal sector outlets,” said Valela.

He said power supply challenges, which also affect water supply among others, remained the major constraints that affected business during the quarter.

Moving forward Delta believes that consumer spending will remain robust, benefiting from stable US dollar pricing, infrastructure spending, agricultural and mining activities and diaspora remittances.

“The focus remains on exploiting opportunities from activities that generate aggregate demand such as infrastructure development projects, mining activities and diaspora remittances.

“The business will benefit from the improved product supply following the commissioning of additional packaging capacity. The recovery trends in the regional entities are encouraging,” said Delta.-ebusinessweekly