Delta says first quarter recovery affected by SI 127/21

Lager beer volumes up 139%
By Staff Reporter
HARARE – Delta Corporation says the Statutory Instrument 127 of 2021 had an adverse effect on promising recovery of the local economy.
Prices of goods and services have been going up in US dollars all of which risks pushing up inflation. This follows the gazetted Statutory Instrument 127 of 2021 under the Presidential Powers (Temporary Measures) which has ‘ostensibly’ caught the market off guard.
The SI 127 empowers the Reserve Bank of Zimbabwe (RBZ) to enforce and penalise offenders of exchange control regulations mainly relating to trading on the foreign currency auction, exchange rates and acceptance of the local currency as legal tender under the multi-currency regime.
Economic agents that misuse foreign currency obtained from the currency auction system, trade at an exchange rate other than the official exchange rate and refuse to accept payment in Zim Dollars without prior approval from the RBZ shall be guilty of an offence and liable to a fine.

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The fines range between ZWL$50 000 and ZWL$1 million.
“The nascent recovery in the Zimbabwe economy, as reflected by slower inflation and a stable exchange rate, was negatively impacted by the dent in confidence in the use of foreign currency for domestic transactions arising from the policy interventions under SI 127 of 2021,” the company said in a trading update.
There are pricing disparities arising from the wide margins between the official and market exchange rates, according to the company.
In the first quarter ended 30 June 2021, lager beer volume grew by 139% compared to the same period last year. This is attributed to competitive pricing, consistent product supply and the injection of new returnable glass.
In Zimbabwe, the Sorghum beer volume rose 106% for the quarter compared to prior year due to improved agricultural output and better access to rural markets.
The volume at Natbrew Zambia declined by 29% for the quarter owing to increased competition from illegal bulk beer and the restricted access to some trade channels. But, there are signs of recovery as the business expands its product offering.
United National Breweries South Africa registered a promising volume growth of 361% over prior year.
The Sparkling Beverages volume increased by 205% for the quarter compared to the prior year as the business continues to recover market share. The current focus is on injecting returnable glass bottles and supplying the full range of flavours and packages.
Afdis registered a volume growth of 47% for the quarter as the unit expands the route to market model to access more channels.
Schweppes Holdings Limited recorded a beverages volume growth of 44% for the quarter on the back of improved product supply and recovery of market share in juice drinks.
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Group revenue rose 114% for the quarter in inflation adjusted terms.
“This reflects the volume recovery across all beverage categories off a low prior year base,” it said.
It benefited from improved access to foreign currency through domestic nostro sales.
“This was disrupted somewhat due to the unintended consequences of the policy change under statutory instrument 127 of 2021. There are cost disparities arising from the wide exchange rate margins,” reads the trading update.
In the outlook, the company said it will continue placing the safety and health of its employees first and abiding by best practice as pronounced by the authorities whilst seeking to recover both volume and profitability.
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