Delta Corporation has issued its trading update for the third quarter ended 31 December 2024, highlighting resilient demand across its product categories despite challenges posed by currency fluctuations, utility disruptions, and competitive pressures.
Group revenue increased by 1% for the quarter and 7% for the nine months, reflecting mixed performances across business units. The company continues to engage with the Zimbabwe Revenue Authority over disputed tax assessments totaling US$73 million, which could impact future operations.
The quarter saw the Zimbabwean Gold (ZIG) currency experiencing significant devaluation since its April 2024 introduction, although exchange rate disparities between official and alternative markets narrowed. Tight liquidity conditions led to supply chain disruptions and pricing misalignments in formal retail channels.
Lager beer volumes grew by 4% for the quarter and 7% for the nine months, supported by recent capacity investments, while sorghum beer volumes increased by 2%, despite a decline in exports and challenges in rural markets. The Chibuku Super brand gained recognition for quality, winning sector awards during the period. Sparkling beverages faced a 16% volume decline due to sugar tax-induced price increases and competition from imports. However, strategic interventions, including promoting low-sugar options, aim to address these challenges.
Wine and spirits recorded significant growth, with volumes up 14% for the quarter and 12% year to date, driven by improved supply and efforts to curb illicit alcohol imports. Meanwhile, Schweppes Holdings Africa experienced a 27% decline in volumes, largely due to the impact of the sugar tax.
The Maheu offerings were relaunched under the Shumba Maheu brand, with an expanded and improved flavour range.
The Company reported that it is contesting the tax assessments issued by the Zimbabwe Revenue Authority (ZIMRA) for amounts that they consider to have been payable exclusively in foreign currency. ZIMRA’s assessment has exposed Delta to a US$73 million debt which includes the principal tax, penalties and interest for value added tax and income tax for periods 2019 to 2022. It is the company’s contention that payments made in Zimbabwean dollars must be deducted to come up with the balance. Meanwhile US$9.2 million has been paid by the company as at 31 December 2024 in line with the pay now, argue later principle and pre-existing payment plans with the authority.
Despite the complex operating environment, Delta remains committed to sustainability initiatives, including campaigns promoting responsible alcohol consumption, waste management, and community involvement. The company sponsors sport and arts events such as the Castle Lager Braai Day, Carling Black Label DJ Clash, the Castle Lager Premier Soccer League, the Chibuku Road to Fame and the Chibuku Super Cup and other brand properties.
The company’s brands continue to excel as witnessed by the award by the Marketers Association of Zimbabwe to the Chibuku Super brand for being the FMCG Sorghum Beer Sector winner for 2024. The brand was also granted the Quality Silver Award at the 63rd Monde Selection of Beers 2024 International Quality Awards.
The company is optimistic about leveraging increased consumer spending while navigating policy-driven challenges in the local and regional markets.
