Delta breaches US$1bn revenue mark

Source: Delta breaches US$1bn revenue mark – herald

Nelson Gahadza

Senior Business Reporter

beverages manufacturer, Delta Corporation, crossed the threshold of US$1 billion annual revenue after record sales volumes across its lager and sorghum beers and sparkling beverages businesses in the 12 months to March 2026.

The milestone marks a significant leap from the group’s US$807 million revenue recorded in the prior year, representing a 35 percent increase.

Profit before tax climbed 56 percent to US$210 million, translating into earnings before interest, tax, depreciation and amortisation of US$236 million, a 42 percent jump.

Speaking at an analysts’ briefing in Harare yesterday, group chief executive Mr Matlhogonolo Valela said the performance capped a deliberate five-year expansion strategy anchored on volume growth, route-to-market execution and sustained investment in manufacturing capacity.

“We have been on a journey for the last five years to try and exceed US$1 billion, to try and exceed US$200 million in earnings before interest, tax, depreciation and amortisation,” he said.

“Across our three main categories — lagers, sorghum and sparkling beverages — we have had record volumes, and we have done so consistently over the last five years.”

Mr Valela noted that the group’s strong topline growth was also supported by an improved product mix and higher foreign currency sales, with 94 percent of domestic revenue now denominated in US dollars, up from 80 percent on the prior year.

During the year under review, lager beer emerged as one of the standout performers, recording growth as demand consistently outstripped available supply.

“In the lager beer space, we have had stock-out situations, meaning that we have had a lot of demand, and we are investing behind that demand,” Mr Valela said.

To mitigate supply shortages, he said Delta imported premium beer brands from regional sister companies while accelerating capacity optimisation programmes at its local breweries.

The group is undertaking major upgrades at Belmont Brewery and Southerton Brewery, including the installation of an additional packaging line, replacement of the brewhouse, expansion of brewing equipment and storage capacity, and upgrades to filtration systems.

Mr Valela said the interventions are expected to raise lager beer production capacity by between 30 percent and 35 percent by November this year.

“By November, we will have added almost US$1 million to our capacity,” he said, referring to additional hectolitre output capability.

The group’s sorghum beer business also delivered significant volumes, rising 19 percent to 4,62 million hectolitres, overtaking the previous historical peak of 4,5 million hectolitres achieved in the financial year 1998.

Mr Valela said that for years, the 1998 benchmark reached during the period of large war veterans’ compensation payouts and heightened liquidity in the economy, had been viewed internally as almost impossible to surpass.

“In the sorghum beer space, we have had, in the past, a peak year in FY98 when volumes were flowing everywhere. This year, we have beaten that number that we have always said is not quite possible to achieve,” he said.

Mr Valela noted that the growth was driven by improved rural and informal sector liquidity, particularly from tobacco sales and mining activity, alongside moderated pricing and aggressive market activations.

Unlike the lager beer segment, Mr Valela said the sorghum beer business still had sufficient production headroom to accommodate future demand growth.

Delta’s non-alcoholic beverages segment also posted record performances, with sparkling beverages volumes increasing 14 percent for the year.

Total soft drinks volumes, including consolidated operations under Schweppes Holdings Africa Limited (SHAL), rose 16 percent to 3,1 million hectolitres.

Mr Valela said the achievement was particularly notable given intensifying market competition and the impact of Zimbabwe’s sugar surtax.

“Our best years, even without competition, were about 1.6 million units. We are well over 2 million now,” he said.

“Competition is there, but our brand power has pulled us through.”

Mr Valela said the company absorbed a substantial portion of the sugar surtax to maintain affordability and defend market share, helping sustain demand through promotions such as the popular Share A Coke campaign.

However, he said the sugar tax continues to weigh heavily on margins.

“It’s over US$30 million that we paid this year, but it can’t go on forever,

“We think the answer is in having regional parity on sugar tax so that competitive issues and affordability are addressed,” Mr Valela said.

He said discussions with authorities on taxation methodologies and related distortions are continuing.

In the region, Mr Valela said in South Africa, United National Breweries posted a modest 6 percent recovery in volumes as Delta expanded penetration of Chibuku Super products into formal retail channels.

The company also recommissioned its KwaZulu-Natal brewery in the fourth quarter to reduce logistics costs and strengthen market coverage.

“In South Africa, we’ve grown volume this year and we are changing the volume from traditional African beer to super variants so that we can pursue margin-rich products.”

By contrast, operations in Zambia remained under severe pressure.

National Breweries Zambia recorded a 27 percent decline in volumes after persistent electricity shortages and rising illicit alcohol sales disrupted operations and market access.

“We’ve collapsed volumes from a monthly run rate of 130 000 to below 50 000. But in the last few months, we’ve noticed that we are growing in volume, but growing in the super variants, which is where there’s margin,” said Mr Valela.

To sustain growth momentum, he said the group is preparing a major capital expenditure programme valued at more than US$120 million for the financial year 2027, nearly three times the US$43,9 million invested in the prior year.

Mr Valela said the investment will focus primarily on expanding brewing and malting capacity at Belmont Brewery, Southerton Brewery and the Kwekwe operations.

“We are very clear that the ancillary associated processes in maltings are going to run out of capacity,” Valela said.

“We will drive that capex expansion of over US$100 million, but fast, to allow our cash flows.”

He said advance payments for critical equipment have already been made and reflected as prepayments on the balance sheet.