Firms reel from low demand

ZIMBABWE’S worsening economic crisis is devouring into listed firms’ toplines as consumers continue to limit their spending habits.

Alex Makamure, Delta’s company secretary

The volatility of the economic situation in the country characterised by high inflation and foreign currency shortages has seen a gross decline in consumer disposable incomes, thus limiting purchasing power.
According to the Consumer Council of Zimbabwe, the cost of food for a six-member family surged by over 470 percent to $4 000 in October, compared to about $700 a year ago.
Simbisa Brands said as “salaries significantly lag inflation, erosion of customer spending power resulted in a 40 percent year-on-year decline in customer counts in Zimbabwe” in the first quarter to full year 2020.
Delta Corporation (Delta) said it recorded subdued performance during the second quarter of the year as the country’s economic situation continues to affect consumer spending.
Lager beer volumes declined by 40 percent for the quarter and 48 percent for the six months compared to the same period last year.
Alex Makamure, Delta’s company secretary, said the listed beverages maker’s sorghum beer volume in Zimbabwe declined 29 percent for the quarter and 15 percent for the six months.
The sparkling beverages volumes declined 36 percent for the quarter and 56 percent for the six months.
“Consumer spending remains low as incomes have lagged the escalation in prices of goods and services,” Makamure said.
Dairibord Holdings (Dairibord) said volume sold during the third quarter declined by 40 percent compared to same period in 2018.
Mercy Ndoro, Dairibord’s company secretary, said liquid milks declined by 22 percent for the quarter and one percent for the nine months to September.
“Aggregate demand has reduced due to the erosion of salaries and wages,” she said.
Volumes for the foods category were 58 percent below the 2018 quarter and 38 percent down on a cumulative basis.
“The category was affected by a shift in consumer spending patterns. Beverages were constrained by supply of both imported and local materials, resulting in a 47 percent volume decline for the quarter and 17 percent on a cumulative basis. Whilst third quarter volumes were subdued, cumulative volumes for all categories to September declined by 14 percent,” she said.
National Foods (NatFoods) said sales in the quarter to September were 36 percent below the same period last year as consumer spending remained constrained in the face of resurgent inflationary pressures.
Colcom’s total volumes were down by 17 percent during the first quarter ending September 30, 2019.
OK Zimbabwe says volume sales declined 23 percent in the half year to September weighed down by slowing demand. African Distillers (Afdis) said volumes declined by 50 percent. newsdesk@fingaz.co.zw