Delta Corporation expects consumer demand to remain firm this year, and is launching an “ambitious recapitalisation” to expand its business, but the company is worried about rising inflation, inconsistent government policy and global cereal costs.
The country’s biggest manufacturer of beverages reported volume growth across its segments for the year to March 2022.
Lager beer volumes grew by 38% – the most beer Delta has sold since 2019 – as supplies of brands and packs improved.
Sorghum beer was up 43%, rising to the best sales levels in five years. This could have been higher, as there was limited access to rural markets and bars due to lockdowns and curfews for parts of 2021.
To meet rising demand, Delta is opening a new Chibuku plant.
“The existing Chibuku Super lines are largely producing to capacity. A new Chibuku Super plant to be installed at the Southerton brewery is on order,” the company says.
Sparkling beverages volumes grew by 65% over the previous year, and Delta is investing in expanding operations in that division.
“The supply of PET packs remains constrained and will be addressed by the investment in additional capacity which will be commissioned before the end of calendar year 2022.”
Beverage volume grew by 22%, due to the re-entry of Minute Maid, but the unit was held back by shortages of Mazoe, its main business.
Delta’s outlook on the economy is a mix of worry and optimism.
The company is concerned about “conflicting transitional policies”, rising inflation and exchange rate volatility, which it says has hurt business confidence.
“The 2022 cereals harvest was negatively impacted by the mid-season drought and imports to fill the gap will be at significantly higher cost due to the surge in food prices in the aftermath of conflict in Europe in addition to the high shipping costs,” Delta says.
But the company sees sales remaining strong, and it is reinvesting in the business.
“There are however indications that aggregate demand will remain firm largely driven by mining activities, diaspora remittances and infrastructure developments,” says Delta. “The Group is undertaking an ambitious recapitalisation programme to address the capacity gaps and improve customer service. This is premised on our hope that the authorities will implement progressive policies in line with the national development strategy.”