In a surprising move, Delta Corporation has hiked beer prices with effect from 14th February 2019. Not only that, their prices are back to US dollars. Delta has tried this before but government intervened and persuaded them to revert back to bond note pricing. Back then, the agreement was that the Reserve Bank of Zimbabwe (RBZ) would allocate them the foreign currency to procure key raw materials in exchange to charging only in local bond notes. Evidently, this arrangement seems to now have fallen apart.

New prices

The new recommended retail price for brown bottles, Castle, Lion and Black Label lagers is now US$1.50 for the 375ml pint. The more prestigious green bottles, Bohlingers, Pilsener and Zambezi will now cost US$2 for returnable bottles while non-returnable ones including Castle Lite cost US$2.50. This is a very steep increase considering that the 375ml brown bottle was pegged at $1 while the green bottles were at $1.25 in bond notes. The latest prices are even higher than the ones Delta recommended when they first tried to charge in hard currency. At that time, the normal 375ml pint was set at US 80c and the green bottles were at US$1 with Castle Lite at US$1.25.

Something is not right

Without an explanatory statement accompanying the new price list, speculation is rife that the RBZ may have failed to provide the foreign currency as they had promised. Those on the elite foreign currency allocation list are not new to this predicament. Pharmaceutical companies have often complained that the allocation they get is far less than what they need to operate normally. On the other hand, RioZim recently revealed that the RBZ had failed to pay them for deliveries made to Fidelity Printers and Refineries despite committing to do so when the gold miner had suspended operations late last year. Probably, government is biting more than it can possibly chew.

It seems the appointment of the Foreign Currency Allocation Committee has not changed anything. These beer prices are also quite high if you ask any beer drinker. At current parallel market rates, US$1.50 is equivalent to about bond $5, just for a pint of Castle lager. We can only guess that these prices reflect the high cost of accessing foreign currency outside the RBZ protectionist allocations. Without the RBZ, Delta have to fend for themselves. Unfortunately, the parallel market remains illegal. As such, their operating costs outside the RBZ forex subsidy are high.

This price increase comes just as we hear that the year on year inflation for January 2019 has gone up to 56.09%. Prices continue to rise unabated, it’s as simple as that. They are fast going beyond the reach of many and businesses are suffering just as much. They have to adapt or die.