Delta cuts down Chibuku production

DELTA CORPORATION has stopped production of standard Chibuku beer at six breweries across the country, as plant rationalization continues after the introduction of its new product brand Chibuku Super.

Company secretary Alex Makamure said the remaining seven standard Chibuku breweries were enough to cover production requirements for Chibuku Scud and Shake Shake.

Makamure said the Zimbabwe Stock Exchange-listed brewer had stopped production at Chipinge, Marondera, Hwange, Mvurwi, Karoi and Zvishavane breweries in line with its rationalisation plans after the introduction of Chibuku Super.

"We have broken ground at Fairbridge Brewery at Umguza just outside Bulawayo where we are setting up the second Chibuku Super Plant, which will be commissioned around May 2015," he said.

Chibuku Super is produced in Chitungwiza.

Following overwhelming success of this newest product, Chibuku Super, Delta also said it was setting up a second plant in Bulawayo to be commissioned in May next year.
The product is being distributed nationally, Makamure said, although there are significant supply gaps arising from the outages of power and water at the brewery.

Delta says Chibuku Super is a result of the significant leap in product innovation and manufacturing technologies for this category, which allows for the establishment of mega breweries. This has released additional capacity at the Harare brewery.

As a consequence, Delta said it would be scaling down production at certain sites that can be fed economically from other sites. The "rationalisation will not result in any losses of permanent jobs as they will be absorbed in the distribution and freight departments and other Group operations."

The pace of rationalisation depends on the success of the Chibuku Super and its impact on the existing Chibuku business, Delta said earlier this year, adding this would take time. The brewer of Castle, Zambezi and Lion lager beers, among other lager brands, said then, that it was reviewing the interplay in the Harare, Marondera and Rusape markets.

Chibuku Super has a shelf life of more than 21 days compared to four days for the standard Chibuku, allowing for its distribution nationally from Chitungwiza. The 15 sorghum beer breweries were part of a distribution network guided by the shorter shelf life of standard Chibuku.

The overall Chibuku volumes have grown 12 percent for the quarter to September 2014 and 14 percent over the comparative prior year for the six months to September 2014, driven by Chibuku Super which contributed 30 percent.

Delta Corporation lager volumes declined by 25 percent in the half-year to September 2014 weighed down by depressed consumer spending coupled with increased excise duty.

The group, about 40 percent owned by SABMiller, said Zimbabwe's economic performance remained subdued, "with significant pressure on consumer disposable incomes".

Despite slashing beer prices by between 5 cents and 20 cents across its products portfolio in early September, Delta said excise duty increase continued to limit affordability.