ZIMBABWE’S largest beverage maker, Delta Corporation, says disparities in the exchange rate and lack of clarity in the legislation relating to currency of payment of certain taxes have created uncertainties in the business.

Company secretary Faith Musinga said the operating environment remained challenging for the group.

“The Zimbabwean operating environment remains complex and challenging. The focus will 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,” she said in the latest trading update.

“The disparities in the exchange rate prevailing in Zimbabwe and lack of clarity in the legislation relating to currency of payment of certain taxes create significant uncertainties and business risks. The business remains poised to exploit opportunities from activities that generate aggregate demand such as infrastructure development projects, mining activities and diaspora remittances.”

Musinga said the group was undertaking an ambitious recapitalisation programme to address capacity gaps and improve customer service.

She said consumer spending remained high reflecting the velocity of the local currency and spurred by increased mining activity, infrastructure projects, marketing of commercial crops and payment of wages and salaries in foreign currency. Demand is, however, being constrained by low disposable incomes in certain consumer groups.

Lager beer volume posted a 19% increase for the quarter compared to prior year. The volume recovery is underpinned by improved supply of brands and packs which have benefited from the injection of returnable glass.

“There are intermittent supply gaps arising from the limited packaging capacity ahead of the installation of a new plant in early 2023,” Musinga said.

Sorghum beer volume in Zimbabwe grew by 14% for the quarter compared to the prior year, driven by the standard Chibuku (Scud) product.

Volumes at Natbrew Zambia remains under pressure, declining 9% for the quarter, in the aftermath of the price increases implemented in January 2022 in response to the hike in excise duty.

There were signs of recovery, which will be assisted by the broadening of the product offering, revamping of the route to market and export of Chibuku Super into the region, Musinga said.

United National Breweries South Africa recorded a volume growth of 13% for the quarter despite setbacks from adverse weather in some markets.

Sparkling beverages volume grew by 32% for the quarter and continue to recover market share. The category has benefited from consistent product supply and an expanded pack and flavour offering.

African Distillers Limited volumes grew by 18% for the quarter. The supply of ciders has since stabilised, after the shortage of glass bottles in the last quarter.

The business continues to benefit from the local production of some key brands.

In the Zambian market, consumer demand remains constrained although the economy is showing signs of recovery as evidenced by a stable exchange rate and declining inflation.

Schweppes Holdings Africa Limited recorded 9% in volume growth for the quarter, which was constrained by a shortage of fruit juices for the flagship Mazoe Orange Crush.

Source Newsday