DELTA Beverages says it has spent an estimated $40 million every year on financing the production of barley, sorghum and maize to sustainably run its breweries.Delta contracts local farmers to produce barley, which is used in lager beer production and sorghum which is used as malt in sorghum beer (Chibuku) manufacturing.
It also contracts for maize used in both sorghum and lager beer and in the production of Maheu.
In emailed responses to BH24, company secretary Alex Makamure said the company has used an average of 25,000 tonnes of barley annually bought at between $450 and $510 per tonne and an additional 10,000 tonnes for export use.
He said Delta had also used at least 8,000 tonnes of red and white sorghum bought at between $260 and $285 per tonne as well as up to 45,000 tonnes of maize at between $450 and $510 per tonne.
The company has, however, said it will not be contracting farmers for the production of barley since it bought excess crop, which it did not use owing to the decline in beer volume sales.
“The total barley intake for the last few years was as follows: 36,000 tonnes in 2012, 47,000 tonnes in 2013 and a further 22,000 tonnes in 2014.
“This is against an average usage of 25,000 tonnes for domestic and a provision of 5-10,000 tonnes for exports,” Makamure said.
He said the domestic beer volumes have declined by 18 percent in 2013 and 25 percent for the year to December 2014.
“This mismatch of a high barley intake and a decline in beer volumes has resulted in the company carrying forward excess barley stocks into 2015.
“We’ve therefore not been able to contract for the 2015 winter season,” he said.
Makamure said the increase in excise duty in 2013 had triggered the decline in volumes and consequently on the whole beer value chain.
He said it will “take a number of years to restore equilibrium in the value chain’.
Delta recently reduced prices on its beer and Coca-Cola brands last year in response to the declining volumes exacerbated by low consumer spending in a depressed economy.
Makamure said the price reviews undertaken will somewhat mitigate the volume losses.
“We’ll be reporting on the volume performance of the quarter to March in mid-April. Suffice to say that affordability is a key factor in managing volumes in an environment where consumers are stressed,” he said. —BH24 Reporter