Current monetary regime to cripple Delta sales

Research firm, Morgan and Company in their Delta first quarter review, have predicted the beverage company might see reduced sales in the current financial year.

“The current tight monetary and fiscal policies have constrained demand from formal channels which drive between 6 percent and 20 percent of Delta’s sales volumes and this is anticipated to result in slower-than-expected demand in FY24,” the report read.

Morgan and Company also said the anticipated El Nino in Southern Africa in the coming agriculture season will constrain sales growth in the coming financial year ending 2025.

“However, we note the increased capacity, election- related expenditure, and the subsequent recovery of the Rand as key positives that will cushion the impact of policy- and climate-related challenges,” the report said.

Morgan and Company said; “With strong sales volumes growth across all local strategic business units Delta recorded a 12 percent growth in lager beer sales volumes, 7 percent growth in sorghum beer sales volumes, and a 11 percent increase in sparkling beverages sales volumes in 1024 on the back of firm consumer spending.”

African Distillers’ volumes were also up 11 percent and were largely driven by the Ready to Drink and Spirits categories.

According to the research firm, aggregate spending was supported by mining sector receipts, good agriculture sector performance as well as diaspora remittances in the region. Sorghum beer sales volumes in South Africa were down 2 percent because of currency volatility but operations in Zambia offset the decline with a 74 percent growth in sales volumes.

Delta in its report said spending was boosted by diaspora remittances and Government spending among others.

“Consumer spending remains firm, being buoyed by diaspora remittances, Government spending on infrastructure projects, mining and agricultural activities and the more stable pricing in US Dollars. The current quarter also benefited from the improved marketing of tobacco,” the company said.

Delta believes the business will benefit from the improved product supply following the commissioning of additional packaging capacity and the recovery trends in the regional entities which are encouraging.

“The focus remains on exploiting opportunities from activities that generate aggregate demand such as the infrastructure development projects, mining activities and diaspora remittances. There are, however, still headwinds in the global economy which impact on the supply, logistics and pricing of commodities and currency volatility,” the company said.-ebusinessweekly