Schweppes Battles Declining Volumes Due To Rising ...

Schweppes Battles Declining Volumes Due To Rising Input Costs, Sugar Tax Impact

Audrey Galawu

Assistant Editor

Delta Corporation Limited’s trading update for the third quarter ending December 31, 2024, revealed a mixed performance across its business units, shaped by rising input costs, economic pressures, and regulatory challenges.

While some categories experienced growth, others, like Schweppes Holdings Africa Limited, reported declining volumes due to increased costs and the impact of the sugar tax policy.

Schweppes Holdings Africa Limited recorded a 2.7% decline in volumes for the quarter and a 17% drop over the nine months. The introduction of the sugar tax in January 2024 contributed significantly to this decline, driving up the cost of production for flagship products like Mazoe Orange Crush.

Input cost increases, supply chain disruptions, and reduced consumer purchasing power further compounded the challenges.

Delta highlighted, “The reduction in the sugar tax from January 2025 is a welcome development, although there are still concerns around the high costs of inputs and the route to market arising from fiscal regulations.”

The lager beer category was a bright spot, with volumes rising by 4% for the quarter. This growth was largely fueled by robust demand during the festive season and the company’s focus on maintaining competitive pricing.

However, Delta noted, “The category continues to face pressure from inflation, supply chain disruptions, and increased operational costs.”

Sorghum beer volumes for Zimbabwe grew by 2% during the quarter but dropped by 2% over the nine months, primarily due to the cessation of exports. The category faced reduced disposable incomes, higher raw material costs, and shifts in consumer spending patterns.

Sparkling beverage volumes declined by 8% for the quarter and 16% over the nine months. Rising production costs, supply chain issues, and reduced sugar availability caused significant disruptions. The company stated, “The pricing of sugar has impacted competitiveness, with imports making it difficult to stabilize the category.”

Delta continues to face unresolved tax disputes with the Zimbabwe Revenue Authority. The company has set aside provisions for additional tax assessments issued in November 2024 while pursuing engagement with ZIMRA for clarity on outstanding matters. Delta remarked, “The Group holds a significant amount in treasury bills receivable from the Government, which could be considered in the settlement of any tax liabilities that may finally be determined.”

In a statement, Delta noted, “Management will continue to monitor the operating environment to minimize disruptions and will seize any opportunities that arise to strengthen the business.”