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Harare – Weaker regional currencies are disrupting Brewer, SABMiller’s Zimbabwe unit’s market position as it is having to stave off cheap imports from Zambia and South Africa, the company said on Thursday.
SABMiller has control of around 40% in Zimbabwe’s biggest brewer, Delta Corporation – which manufactures alcoholic and non-alcoholic beverages in the country. Continued slowdown in global economies such as China and a commodity price rout on global markets has meant persistently weaker currencies across the region.
This was pausing unfair competition for Delta’s alcoholic and non-alcoholic beverages as cheap imports are eating into the company’s market share.
Zimbabweans are also increasingly switching to cheaper alternatives such as spirits, according to executives in Zimbabwe.
“There is some infiltration of product from adjacent markets due to the weaker regional currencies. Consumers continue to shift towards affordable brands,” Delta Corp said in a trading update released late on Thursday.
The company will release its full year financials for the year to the end of March on May 12 and it cautioned that revenue for the full year would be down by 6%. For the quarter to the end of March, revenues are down 7%, a position the company said reflects “changes in the portfolio mix and price moderations” which lead to reductions during the year.
Delta said this performance mirrors the “subdued economic activity during the period” as Zimbabwe battles a prolonged period of poor performance in the economy. Manufacturing capacity has sagged to below 40% and economic growth is expected to be about 1.5%, according to the government although independent estimates point to growth below 1%.
“Lager beer volume is 12% below prior year for the quarter and down 8% for the full year. The company will continue to review the competitiveness of its offerings.”
The soft drinks category had however increased by 6% in the March quarter but declined by 6% for the full year. There was some respite from Chibuku, the sorghum based opaque beer aimed for the lower end of the market which rose by 15% in terms of volumes for the full year.
“The current growth is partly due to the favourable pricing on the standard Chibuku offering and the improved availability of Chibuku Super (a longer shelf life variation of the product),” Delta said.
Delta and other companies have continued to report declining revenue and profitability performance, with consumer spending patterns in Zimbabwe weakening.
This comes as most companies in the country are slowing down while consumers are grappling with liquidity shortages that have lead to banks running out of cash.
