Zimbabwean beverages manufacturer Delta Corporation says poor fiscal and monetary planning has resulted in increased taxation, a weakening local currency and consequential inflationary pressures that have hit consumer spending in the country.

Resultantly, the group recorded an 89% volumes decline in the quarter to December 31, 2018.

“The fiscal and monetary policies implemented between October 2018 and February 2019 have significantly altered the trading environment. Of particular note is the 2% transaction tax, the adoption of the local currency (RTGS$) as the functional currency and the introduction of an exchange rate of the RTGS$ to the USD,” said Delta in its latest trading update.

“The value of the RTGS$ deposits continues to be eroded by the fast depreciating exchange rates and cost push inflation. Resultantly, there has been a severe decline in aggregate demand. The acute shortage of foreign currency persists despite the introduction of the inter-bank foreign exchange market. The exchange rate needs to be supported by robust and complementary fiscal and monetary policies.”

During the period under review, Zimbabwe was experiencing foreign exchange challenges due to prevalence of illegal trading of the United States dollar.

And although in February the Reserve Bank of Zimbabwe (RBZ) introduced an inter-bank foreign exchange market to improve the allocation of foreign currency and remove the distortions that were impacting the market, the challenges have remained.

The significant decline in Delta’s volumes, especially in the last quarter of 2018 has been attributed to foreign currency shortages that affected the company’s capacity to import critical raw materials.

Delta’s Lager beer volumes declined by 3% in comparison to prior year for the quarter, but were up 31% for the full year.

“Demand has reduced due to the increase in RTGS$ wholesale and retail prices,” said management.
The Sorghum beer volumes contracted by 2% versus prior year for the quarter and grew by 5% for the full year.

Chibuku Super contributed 85% of the total category volume.

National Breweries Plc – Zambia (Natbrew Plc) recorded a volume decline of 24% for the quarter and is flat on prior year for the twelve months.

Delta said it expects total revenue to reflect an increase of 33% for the quarter and 26% for the full year.