SABMillers Delta Corp sells Castle lager in Zimbabwe

SABMiller's Delta Corp sells Castle lager in Zimbabwe

A Government proposal to ban alcohol sales on weekday evenings threatens to dampen SABMiller's fresh optimism for beer in Zimbabwe.

SABMiller said today (18 October) that it has reintroduced Zimbabwe into its annual reporting, following Government success in stabilising the country's currency. Zimbabwe contributed to nearly a third of the brewer's rise in organic beer sales by volume in its Africa business for the six months to the end of September, said the Peroni Nastro Azzurro brewer.  

However, benefits to SABMiller could be short-lived if Zimbabwe's health minister, Timothy Stamps, gets his way. Stamps has outlined a Government proposal to ban retailers and bars from selling alcohol after 19:00 on weekdays and after midday on Sundays in order to reduce harmful consumption, according to local newspaper, The Standard.

Bar owners have fiercely criticised the plan, which is contained in Zimbabwe's National Alcohol Policy, the newspaper reported yesterday (17 October). It is thought that the policy would significantly curtail licensed beer sales.

SABMiller operates in Zimbabwe via a 36% holding in Delta Corp. The two companies have committed to invest US$112m in capital expenditure in the country's beer and soft drinks sector over the next two years, which includes construction of a new beer facility in Bulawayo. 

In SABMiller's most recent fiscal year, Delta's contribution to SABMiller volume sales was 0.3m hectolitres of lager and around 1m hectolitres of soft drinks, which included the Coca-Cola brand. It also sold 1m hectolitres of other alcoholic beverages, mainly spirits.

Delta has an approximate 90% volume share of Zimbabwe's beer market and 85% of the soft drinks market, according to SABMiller. The group has struggled to survive a turbulent period in the country's history. During the height of the country's hyperinflation in 2007 and 2008, Delta was forced to pay staff in food and supplies rather than money. 

The firm had net sales of US$330.8m for the year to the end of March 2010, according to its annual report. It said that volume sales increased strongly during the year, but it warned of a "backlog" of necessary upgrades to plant and equipment.

When contacted by just-drinks, an SABMiller spokesperson said that Delta Corp was better-placed to comment on the Government's proposal for a sales curfew. However, Delta Corp was unable to comment prior to just-drinks' deadline.