Zimbabwean beverages giant Delta Corporation has completed the acquisition of South African brewer, United National Breweries, in move aimed at boosting the firm’s multi-beverage strategy.
Acquisition of South Africa’s largest traditional beer manufacturer is expected to enhance Delta’s traditional beverage portfolio, mainly in respect of improved foreign currency generation.
The acquisition is the second regional investment by Delta after the purchase of National Breweries Zambia in 2017.
The group’s company secretary Alex Makamure however said the new acquisition is yet to begin contributing to the portfolio due to the coronavirus (Covid-19) pandemic.
South African currently has a ban on the sale of alcoholic beverages as part of wider measures to fight the spread of the health pandemic.
“The acquisition of United National Breweries, the leading producer of traditional beer and allied products in South Africa, has been concluded with effect from 1 April 2020. It is noted that South Africa has implemented very strict prohibitions on the sale and consumption of alcohol during the Covid-19 national lockdown.
“As such, the business is yet to trade since the conclusion of the transaction.”
The deal was initially agreed upon in 2018 and was targeted to be concluded in the first half of last year.
The group also announced that its revenues for the fourth quarter to March 31, 2020 rose despite a general decline in volumes.
“The revenue for the fourth quarter grew by 20% in inflation adjusted terms (720% historical) driven by the replacement driven product pricing and a low prior year base. The revenue increased 14% for the full year (historical 480%) compared to the average inflation of 363%,” said Makamure.
Delta’s lager beer volumes were down 27% for the quarter and 42% for the full year compared to the same period last year. Management said there “was a prioritisation of returnable bottle packs in an effort to conserve foreign currency and drive affordability.”
Sorghum beer volume in Zimbabwe declined by 27% for the quarter and 25% for the full year.
At Natbrew Zambia, the volume was 37% down for the quarter and 27% for the full year compared to last year.
Sparkling beverages volume grew by 368% for the quarter off a low base in 2019 when the business was virtually closed. The volume declined 17% for the full year.
At African Distillers (Afdis), the total volume declined 12% for the quarter, although the unit also benefited from a favourable product mix.
The beverages volume at Schweppes Holdings declined by 24% for the quarter due to low consumer demand.
Delta said supply of the Mazoe Orange Crush improved during the quarter following a period of shortages.
Going forward the group expects to take a significant hit from the Covid-19 pandemic.
“The selling and distribution of beverages has been curtailed by the restriction of movements and social gatherings, closure of on-premise consumption outlets and prohibition of other commercial and social activities that were deemed to pose a risk of spreading Covid-19.
“The company has implemented various mitigation measures to improve the workplace health and safety and continues to assess the commercial risks arising from the pandemic. Covid-19 has and continues to adversely impact the national economies of most countries and is exacerbating the already fragile and difficult economic situation in Zimbabwe.
“There are many uncertainties that make it difficult to fully estimate the full impact of the Covid-19 pandemic on the financial health of the company and group entities.”