Beer volumes to rise, says study

27 Aug, 2017 - 00:08 0 Views

The Sunday Mail

Enacy Mapakame Business Reporter
BEER volumes are expected to rise in line with global trends despite a sustained decline in recent years.

According to Statistics MRC – a United States of America-based global research consulting firm – the global beverages market is expected to grow at a Compound Annual Growth Rate (CAGR) of 3, 2 percent until 2022, thanks to increased consumption and spending in developing countries.

Zimbabwean beverage companies – Delta and Afdis – are well positioned to cash in on this growth, experts say. While figures from 2016 showed volumes were constrained against moderating demand as consumers downgraded to cheaper alternatives, latest figures from the two domineering beverages firms show brighter prospects.

Analysts also hold the view, while the economy may experience low consumer spend, the projected boom in agriculture on the back of a good rain season will spur economic activity and increase disposable incomes, a development that will cascade into the beverages sector.

At its latest annual general meeting in July, Delta indicated improvements in lager volumes which rose by 12 percent during the four months into the current financial year, compared to same period last year. Chibuku Supa brand, which is Delta’s flagship in sorghum beers, was also 9 percent higher.

On the other hand, Afdis, which released its half year results for the year ended June 30, 2017 last week, indicated that volumes for its three product categories registered double digit growth, with wines leading the pack at 29 percent.

Spirits continue to be the major revenue contributor at 66 percent. Ready-to-Drink (RTDs), ciders and spirit coolers, which contributed 24 percent to total revenue, registered a 22 percent volume growth.

In line with the overall volumes growth, total revenue for the year also increased 13 percent to US$25 million.

Market watchers say the evolving social customs are also influential in beverage sales. In developing countries like Zimbabwe, a growing brand-conscious middle class and rising wealth is offering opportunities for brand equity development, with growing demand for wines and ciders, which plays well for Afdis.

According to Infiniti Research, among all the products in the beverages sector world over, beer generates the maximum revenue followed by spirit and wine, with beer being the highest consumed alcoholic beverage in the world and third most consumed beverage after water and tea.

Analysts have, however, emphasized that without a solution to the cash shortages, the market will remain constrained especially in rural areas, while unforeseen disasters such as flooding that was experienced early this year might add pressure to beverages firms. Delta is on record as saying incessant rains had made it difficult for the beverages maker to access some of its markets were roads and bridges were damaged.

Limited payment platforms, particularly in the rural areas where Point-of-Sale (PoS) machines and mobile banking are not readily available will downplay Delta and Afdis efforts to bite into anticipated global growth.

In addition to that, the high competitive rivalry among major players, increasing raw material prices, Government regulations and availability of substitutes are the factors hampering the market growth.

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