Delta Corporation, Zimbabwean biggest company by market value with a diverse portfolio of local and international brands in lager beer, traditional African beer (TAB), and non-alcoholic beverages, is planning to enter the markets in Malawi and Botswana with its Sorghum beers before year-end.
“What we are trying to do is to diversify our earnings going into bigger markets by consolidating the ownership of the Chibuku brand in southern Africa,” said Pearson Gowero, Chief Executive of Delta Corporation. “We already own it here in Zimbabwe, we own it in Zambia and South Africa, and that leaves a few places, which is Malawi and Botswana that we are seriously pursuing at the moment because we think there is potential in those markets,” he told Standardbusiness.
Chibuku is a pan-African brand of opaque sorghum beer made by various brewers across Africa.
In Botswana, Chibuku is brewed by Kgalagadi Breweries Limited (KBL), Botswana’s sole producer of clear beer and TAB. KBL operates three TAB breweries, one clear beer brewery, a sparkling soft drinks production plant, and six sales and distribution depots, employing over 1,000 people across the country.
In Malawi, Chibuku is made by Chibuku Products Limited Malawi (CPL). The company has increasingly the problem of Chibuku Super beer that has been smuggled into the country from neighbouring Zambia. CPL lately noticed a drop of its sales by 50 percent. “We have been struggling for almost two years and when we checked at the market to find out why our sales have dropped, we discovered that there is a lot of Chibuku Super in the market that is being smuggled into the country from Zambia,” Gloria Zimba, Business Development and Cooperate Affairs Manager of CPL told last month Nyasa Times.
Chibuku has only a limited shelf life of 4 to 6 days which makes a local production inevitable. A fresh Chibuku starts at about 0.5% ABV on day one, but as fermentation continues the stronger it gets. It may achieve 4% ABV before the shelf-life expires. Chibuku Super was developed more than 5 years ago by Delta Corportion to overcome the problems of the limited shelf life of the traditional product. Chibuku Super can be stored more than 21 days which allows a national distribution.
However, according to Pearson Gowero, the main reason for Delta’s move to enter additional markets is not the limited shelf life of the exported product but “to earn forex. Admittedly, the supply of foreign currency on the interbank market is not enough,” Gowero said. “We require about USD 5 million per month and currently we are getting close to half of that amount as we go and bid up to the rate we can afford.”
In January, Delta advised their wholesale and retail customers that it will now be selling its products in US Dollars but reversed its decision when the Reserve Bank of Zimbabwe (RBZ) assured it would provide the beverage manufacturer the forex required to fund its import requirements. Shortly after, the government allowed electronical transfer of US dollars in order to dry up the black market (inside.beer, 5.2.2019).
Zimbabwe is currently undergoing a severe economic crisis. Zimbabwe’s newly-introduced currency has lost about four times its value against the US dollar over the past few months. Imported goods have become so expensive that companies have delayed investments and stopped importing raw materials from abroad.
Delta had to record a plunge in its lager beer volumes by 57% for the first quarter ended June 30, 2019, but Sorghum beer as a cheap alternative grew by 2% (inside.beer, 26.7.2019). While the more expensive lager beers are considered a premium product, which appeal to Western style oriented, wealthier and better educated people, traditional African beers are cheaper and mostly consumed by the poorer and less educated population.
In the last years, Delta has already emerged to become one of the leading producers of traditional African beer in sub-Saharan Africa.
In 2017, Delta bought National Breweries of Zambia from Heinrich’s Syndicate, a subsidiary of AB InBev. National Breweries of Zambia is the leading producer of traditional African beer, namely Chibuku ShakeShake and Chibuku Super in the landlocked country in south-central Africa (inside.beer, 14.10.2017).
In December last year, Delta entered into an agreement for the purchase 100 percent of United National Breweries (UNB), Diageo’s sorghum beer business in South Africa (inside.beer, 20.12.2018). UNB is the leading brewer of traditional beer and owns the Chibuku brand. “We had projected to conclude the transaction by the first half of 2019; it’s unfortunate that we are still in the process of finalising it,” said Gowero.