American celebrity Billy Carter once said there was no such thing as a bad beer. “It’s that some taste better than others,” he said.
In Zimbabwe, it’s turning out that there is a bad price for some beers and the country’s largest brewer, Delta Corporation, a unit of SABMiller, is admitting it.
The hike in its beer prices has pushed some consumers to cheaper and often illicit, brands — and into mushrooming churches where they are being called on to ditch beer altogether. In a trading update issued last week, Delta said it had witnessed “a significant slowdown in consumer spending and economic activity”.
“This was particularly pronounced in this quarter, the traditional holiday peak period,” the company said.
Delta controls 96% of the beverages market in Zimbabwe. The company said lager volumes had registered a 25% drop for the quarter to December 31 2013, or a 15% drop during the nine months to December 31 2013.
In its full year to March 2013, Delta had reported that lager beer volumes, led by its flagship brand Castle Lager, had reached a new record high of 2,06-million hectolitres and closed the year at 4% above the year before.
But a hike from 40% to 45% in duty on lager by a cash-desperate government in December 2012 has begun to take its toll on sales. It forced a marginal price increase at the manufacturer level, resulting in what the company said was a “disruption to retail pricing thus slowing off-take in the last trading quarter of the full year to March 31 2013. The effective excise rate is now higher than the regional average,” the Delta board chairperson Canaan Dube said.
In the year to March 31 2013, the sale of sorghum beer, also known as opaque beer, slumped 8% to 3 080 million hectolitres.
The reason for the decline in volumes was partly to the poor agricultural season and partly to a raw material cost-induced price increase. But it’s not all gloom for the brewery. Some of those who cannot afford lager are turning to the once-shunned sorghum brew, which is cheaper.
Sorghum beer is on the upsurge, recording a significant growth of 18% during the quarter to December 31 2013, or 12% during the nine months. This, the brewer reasons, is because of “strong consumer acceptance for the category driven by the success of Chibuku Super”.
Chibuku is a sorghum-based brew, similar to the traditional home-made beer and is packaged in a container called “shake-shake”.
But lager has been the bigger revenue earner and Delta is worried about the decline in volumes.
“We continue to engage the authorities on the adverse impact of the high levels of taxes, which drive consumer prices,” Delta said in its January 17 2014 trading update.
Finance minister Patrick Chinamasa, in his budget presentation in December, did not tamper with the excise duty on clear beer, which was introduced by his predecessor, Tendai Biti, to ameliorate the harm caused by alcohol on society. Tobacco had also been slapped with a higher duty.
Since its introduction, the excise duty on clear beer has boosted the government’s coffers significantly. In fact, the revenue collector Zimra, at its taxpayers’ appreciation day, recognised Delta as one of the highest dollar-value contributors, particularly in the excise category. Last year, Delta made total tax remittances of $173 million. But, the drop in beer demand may not be attributed just to decreasing consumer spending.
Mairosi Mubvumbi, a pastor with Hope in Christ Ministries, said the lower beer consumption was the result of an increased number of people turning to the church for sanctuary — ironically from the economic hardships they are facing.
“We are assisting a number of new converts battling to stop drinking alcohol every week,” Mubvumbi said. “We give counselling and pray for alcohol addicts. People are coming to Jesus and, in church, we discourage beer.”
He said the church was “growing phenomenally” and taking away people from beer halls.
“We cannot hide from the fact that people are under economic pressure and are seeking deliverance in the church. Lunch-time prayer meetings are filling up with people trying to escape the economic woes and it’s always a point that we ask them to stop beer consumption for deliverance,” he said.
But there might be another explanation. Some people believe that beer drinkers have not stopped drinking, but are turning to home-made brews and illegally imported beverages that are cheaper and have a higher alcohol content.