RESEARCH firm Morgan & Co has projected that lager and sorghum beer sales volumes at Delta Corporation will continue to grow, bolstered by recently announced tax relief measures.
Finance, Economic Development, and Investment Promotion minister Mthuli Ncube last week proposed allowing retailers to purchase directly from manufacturers, provided they furnish the manufacturer with a valid tax clearance certificate and proof of Value Added Tax (VAT) registration.
Ncube also proposed permitting manufacturers to sell directly to institutions such as hotels, schools, and other corporates, provided these operators are registered for VAT and possess a valid tax clearance certificate.
Additionally, the Treasury chief announced a reprieve through a waiver of the special surtax on beverage sugar content due from January 1, 2024, to February 8, 2024.
In response to representations from the productive sector, the government adjusted the special surtax on beverage sugar content from US$0,002 per gramme to US$0,001 per gramme, effective February 9, 2024.
“Delta is poised to break production and sales records because of completed capex projects which have addressed capacity problems,” Morgan & Co said in its analysis of Delta’s trading update for the first quarter ended June 30, 2024.
“We anticipate that sales volumes will continue to grow in the lager and sorghum beer SBUs (strategic business units) because of the positive ripple effect of the recently announced tax relief measures on aggregate demand.
“El Niño effects, however, will likely continue to dent the rural and low-income population. Further, the sparkling beverages SBU could experience margin pressures as the sugar tax takes effect regardless of the tax relief measures.
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“That said, meteorologists are expecting improved rainfall in the 2024/25 agriculture season, and this could upend the challenges that Zimbabwe currently faces. In the interim, we maintain that Delta will rely on increased inflows from diaspora remittances as well as the stronger gold price.”
Delta's lager SBU posted a 9% increase in sales volumes, compared to the prior period largely because of improved production capacity.
The sparkling beverages SBU also saw an increase in sales volumes of 11% because of capex and delayed implementation of the sugar tax.
African Distillers' sales volumes also grew by 6% because of improved product supply. African Distillers is a unit of Delta.
However, local sorghum beer sales were down 10% as demand moved upstream and the low-income population, whose pockets have been acutely affected by El Niño-reduced consumption of opaque beer.
Sorghum beer sales volumes in South Africa were comparable to the prior period while sales volumes in Zambia were slightly up at 2%. Total revenue was up by 3% in the quarter in United States dollar as pricing moderations softened the impact of the higher sales volumes.
