Coca-Cola Company, Delta Finalise Renewal Deal

LISTED beverages giant, Delta Corporation Limited is working closely with The Coca –Cola Company (TCCC) towards the renewal of a bottler’s agreement, company chairman, Canaan Dube has revealed.

Dube made the remarks in a recent trading update to shareholders accompanying financial results for the period ended September 30 2019.

The company has been trading under a cautionary issued with respect to the notice received from TCCC advising of the intention to terminate the bottler’s agreements with the group entities.

“This followed the merger of AB InBev and SABMiller Plc in October 2016 and the subsequent agreement in principle reached between TCCC and AB InBev to explore options to restructure the bottling operations in a number of countries. The parties are finalising the renewal of the bottler’s agreement for a three-year term to September 2022,” said Dube.

Meanwhile, Delta suffered losses in lager beer volume which declined 48% compared to the same period last year despite pricing of the category being moderated to maintain affordability given the prevailing economic challenges.

During the period under review ,sorghum beer volume declined 15% despite major inputs . The prices of the major inputs such as maize and imported packaging materials rose ahead of disposable incomes.

As a result the trend has put pressure on the sorghum beer prices which has resulted in consumers switching to more affordable brands and packs within the category.

The sparkling beverages volume declined 56% on last year mainly due to the prolonged stock outs at the beginning of the financial year whose volume has recovered in the last quarter on the back of improved product supply and moderated retail pricing.

Raw material supply remains a challenge as the category has a high import content.

For National Breweries PLC (Zambi), volume was 20% down last year, which is partly due to higher pricing on the back of a steep increase in maize prices and the depreciation of the Kwacha.

Consumer acceptance of the recently launched returnable pack has been encouraging. Product supply is constrained by capacity and power supply disruptions.

Chibuku Super and Shake Shake were the dominant packs.

African Distillers (Afdis) recorded a soft volume out-turn at 41% below prior year due to limitations in accessing and the high cost of foreign currency.

The business continues to successfully launch products that are less foreign currency hungry.