Delta steps in to ‘save’ Chibuku

\When Financial Insight Zambia published “Budweiser lacks taste for Chibuku 2017”, we predicted with certainty that it was only a matter of time before National Breweries’ flagship beverage was going to be disposed of. Its finally been sold.

In SENS Announcement from National Breweries of 2nd January 2018, the company announced that Heinrich’s Syndicate Limited (“Heinrich’s”), a subsidiary of Anheuser – Busch InBev SA/NV (NYSE:BUD) had entered into a Share Purchase Agreement with Delta Corporation Limited (“Delta”) (ZSE: DLTA) for the sale of all of the shares held by Heinrich’s in Natbrew to Delta.

Founded by Maxwell Heinrich, Heinrich’s Syndicate Limited operates as an opaque beer manufacturing company. The company is based in Zambia and operates as a subsidiary of SABMiller plc. Therefore, it was the prodigal company that came with the bounty that was purchased that did not fit the profile of the product portfolio that InBev is accustomed to.

The mechanics of the deal are simple. InBev has disposed of its 70% (44 100 000 Natbrew shares at ZMK 2.80 as at 29 December 2017) shareholding to the Zimbabwean Delta Corporation outfit that has a rooster of beverages that includes opaque. In short, Delta has come to save NatBrew.

A look at its Natbrew’s 2016 annual report shows that bulk beer maker was steadily increasing turnover year on year. For example from 2015 to 2016 revenue increased by 15% with shareholder funds increasing by 12% in the same period. However, it has fallen on hard times. Following the purchase of SABMiller by InBev, it was certain that a product range that was not in the overall strategy of the group company would soon face the guillotine.

Needless to say, Delta has acquired a formidable asset. With their experience, we expect a turnaround of fortunes for the bulk beer maker. They will bring the expertise that has made them successful in their country of origin albeit under the most difficult of macro environments which we believe will so change with the recent regime change that has occurred. The timing could not be better for Chibuku both in Zambia and Zimbabwe.


Bloomberg Company Fact File

Delta Corporation Limited manufactures and distributes beverages in Zimbabwe. The company operates through Lager Beer, Sparkling Beverages, and Sorghum Beer segments. It provides lager beers under the Castle Lager, Castle Lite, Golden Pilsener, Lion Lager, Carling Black Label, Zambezi Lager, Zambezi Light Lager, Bohlinger’s Lager, and Eagle Lager brands; and sorghum beers under the Chibuku, Chibuku Super, and Thabani brands. The company also engages in bottling carbonated sparkling beverages, as well as non-carbonated cordials; provision of bottles mixers, including soda water, tonic, ginger ale, and lemonade, as well as Mazowe, minute maid fruit juices, and Schweppes still water.

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