Chibuku drives Delta earnings

By Daniel Chigundu

DELTA Corporation earnings per share rose nine percent to US$3.83 cents driven by an increase in Chibuku Super volumes, the company has said.

The positive result in sorghum beer has helped  grow the company’s total beverage volumes by four percent at a time when lager beer sales have slumped.

Lager beer volume was down 10 percent to prior year yielding to a soft consumer demand occasioned by liquidity and affordability constraints.

In a statement accompanying its half year results ended September 30 2013,  Delta said because of the impressive growth shown by sorghum beer they are focusing on commissioning a second plant for Chibuku Super in the second half.

“Sorghum beer volumes grew nine percent, driven by a successful introduction of the premium Chibuku Super. Investments are being accelerated to support the growth in Chibuku Super.

“Total beverage volumes grew by four percent over prior year, driven mainly by the recovery in sorghum beer,” the company said.

Currently the popular Chibuku Super is only being manufactured at Chibuku Brewery in Chitungwiza where the company has invested in access of US$6.5 million in a state of the art fully automated bottling plant purchased from a German company Krones.

In an interview earlier in the year,  company technical services manufacturing development manager at the brewery Brian Karemba said they are failing to keep the product in stock because of huge demand.

“We are excited by the level of demand that we have seen ever since the introduction of this product to the extent that we are not even stocking anything as trucks will already be waiting to deliver to customers.

“After packaging Chibuku Super, it is only taken into a warehouse as a formality for accountability purposes but it is not staying there for more than 10 minutes and as you can see the warehouse is empty and trucks are actually waiting for the product and such has been the demand since we started,” said Karemba.

Chibuku Super is brewed in the same way as the standard Chibuku but is fermented longer to a consistent alcohol level and is said to be smoother, has consistent quality taste and a longer shelf life of 21 days.

The Zimbabwe Stock Exchange listed blue chip company said they specifically invested in new equipment that has new technology to produce the desired results of the product.

While the Chibuku Super is being distributed in specific urban markets, investing in additional bottling lines will enable easy rolling out the product to other centers, including rural areas.

Meanwhile Delta has heaped blames on an increase in excise duty and liquidity challenges prevailing in the economy for the poor performance of its lager beer volumes arguing that it might hamper the benefits set to be achieved from the success of its barley contract scheme.

“Our 2013 barley contract scheme is expected to deliver record crop of over 40 000 tonnes indicating an improvement in yields to over 5.5 tonnes per hectare.

“Unfortunately the benefits of the contract scheme could be curtailed going forward in view of the downward trend in lager sales.

“The challenges of the disruptions to recommended retail prices arising from the excise duty increase remain. Our premium brands contribution have helped to mitigate the impact of this volume loss on revenue,” said Delta.