Crisis, as Delta Corporation rejects Bond Notes

By Daniel Chigundu

GIANT beverages manufacturing firm, Delta Corporation has advised its wholesale and retail customers that it will now be selling its products in US Dollars beginning Friday (4 January 2019).

Delta which accounts for the majority of beverages in the country both alcoholic and sparkling needs about US$40 to US$60 million per year to import raw materials from such countries as Swaziland.

However, due to the prevailing economic hardships in the country, the company has been failing to get enough foreign currency to import the raw materials leading to shortages on the market and threat to close down plants.

Despite buying raw materials in foreign currency, the company has been selling its products for local currency and has not increased its prices since 2009 when the country dollarized.

However, with the economic situation getting worse in the country, Delta said in a statement that there is need to protect its over US$600million investment in plant, equipment, vehicles and ancillary services as well as to ensure continued operations, hence the change in currency.

“Our business has been adversely affected by the prevailing shortages of foreign currency, resulting in the company failing to meet your orders and in the case of soft drinks, being out of stock for prolonged periods.

“The new fiscal and monetary policy framework in place since October 2018, does not provide for easy access to foreign currency by non-exporters. The company has only received limited foreign currency allocations from the banking channels, which have not been adequate to fund the import requirements.

“Resultantly all our foreign suppliers are unable to continue providing credit or meet new orders as some of them have not been paid for extended periods.

“In order to sustain its operations, the company advises the retail and wholesale customers that its products will be charged in hard currency with effect from Friday 4th January 2019,” said the company in a letter to customers.

Despite the change in the type of currency, Delta has however maintained its pricing especially for sparkling beverages with and is hoping that customers will adhere to the pricing list.

“We attach our current price list and recommended retail prices, which are all in US Dollars. We trust that our customers will continue to charge the recommended retail prices in USD or equivalent currencies based on the multi-currency framework,” said Delta.

Coca-Cola, Fanta, Sprite and Sparletta 300ml (returnable containers) is pegged at US$0.50 cents, while 330ml cans of the same products will fetch US$0.60 cents and it’s the same price for the 300ml PET.

The 500ml PET is pegged at US$1 while a 1 Litre returnable is at US$I and PET of the same quantity is at US$1.40cents.

It however remains to be seen how this change of currency will affect other sectors that rely on the company’s products.

Delta’s alcoholic and none-alcoholic products play a key role in the country’s tourism sector especially the hospitality industry.

 

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