Delta Beverages reported a 10% decline in sorghum beer volumes for the last quarter, as Chibuku sales were hit by drought and rising competition, particularly from Innscor’s Nyathi brand.
In the three months to June, Chibuku sales suffered due to drought, reduced exports, and drinkers switching to lager and illicit brews. Delta cited competition from hard spirits and increased lager beer supply as additional challenges.
Innscor’s Nyathi, launched in 2022, is eroding Delta’s market share. Despite Delta’s larger capacity and superior distribution, Nyathi is making inroads. Delta’s CEO, Matlhogonolo Valela, noted that Innscor’s capacity is still far below Delta’s, with Innscor producing 30,000 hectolitres per month compared to Delta’s 400,000 hectolitres. He remains unconcerned about a major threat from Nyathi for now.
Delta’s lager beer volumes grew by 9%, driven by strong demand and improved supply from new investments. Soft drink volumes rose by 11%, but Delta worries about the impact of a new sugar tax and cheaper imports.
USD sales have dropped from 80% to 65% after the introduction of the Zig in April. Delta continues to face challenges accessing USD in the forex market.
Delta is also dealing with a US$54.7 million tax bill after a Supreme Court ruling. The company is exploring settlement options, including using Treasury Bills.
