Soft drink and beer leading producer, Delta Corporation will start charging retailers and wholesalers in US dollars from Friday 4th January 2019. In a statement to customers, Delta cited the failure by the new fiscal and monetary policy frameworks to provide for easy access to foreign currency as the major reason for this move. The company also said that the limited foreign currency allocations from the Reserve Bank of Zimbabwe (RBZ) have been inadequate in funding import requirements.

Part of the statement from Delta read, “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. It is noted that:

  1. Our products are fairly priced in USD and have remained largely unchanged since 2013.
  2. The Company has invested in excess of $600 million in plant and equipment, vehicles and ancillary services since 2009. There is need to protect this investment and ensure sustenance of all value chain partners…The company does not trade on the parallel or black market and does not subscribe to any exchange rate between the USD and the RTGS or Bond Notes, as they are not currencies…”

A glance at the prices shows that the wholesale price of a case of 300ml soft drinks is $9.60, while the recommended retail price per bottle is 50 cents, translating to $12 per case. The recommended retail price for 375ml returnable bottles of Castle, Lion and Black Label lagers is 80 cents while the green bottles, Zambezi, Pilsener and Bohlingers 340ml will cost $1.


Zimbabwe National Chamber of Commerce Chief Executive Officer Takunda Mugaga said the decision by Delta shows that the economy is redollarising faster than we can catch up. “Delta being a market leader as well as industry on its own due to the monopolistic nature of its being, the result is expedited redollarisation which will have an enterprise-wide impact from the farm to the salary of an employee directly and indirectly employed by Delta,” says Mugaga.

It should be noted that fast foods giant Simbisa Brands recently started implementing US dollar pricing but unlike Delta, they still accept RTGS and Bond Notes based on prevailing parallel market rates. This trend is set to push the surrogate currency out, the same way the Zim dollar lost value leading to dollarisation in 2009. We may begin to see more RTGS and Bond Note inflation and the US Dollar is likely to emerge as the preferred currency without any government pronouncement. Effectively, all those employees (Junior Doctors included) who have been demanding their salaries in foreign currency now have another leg to stand on.

Government stance

Government has been quick to express its displeasure calling any move to charge in preferential currencies as being “illegal”. Industry and Commerce Minister Mangaliso Ndlovu says, “I have seen it (communication from Delta) but I think we should be meeting them this Friday (tomorrow). That cannot be allowed”. Earlier in the week, Acting President Constantino Chiwenga ruled out paying striking doctors in foreign currency pointing out that government does not print US Dollars. But, according to ZNCC boss Takunda Mugaga, government stands to benefit from companies charging in forex since they will pay their corporate tax, excise tax, PAYE and VAT in forex as well. He warned that stopping Delta from charging in foreign currency may lead to “job losses”. This is due to the fact that decreased production will lead to viability challenges. Although government does not print US dollars, they surely have better access to it.

The dilemma

What is apparent from the decision by Delta is the dilemma in which most non exporters find themselves in. Delta do not generate the foreign currency, yet they require about $2 million per month to procure critical raw materials like drink concentrates. When they announced their results for six months to September 2018, Delta owed dividends worth US $30 million to Anheuser-Busch Inbev, a major shareholder in Delta. Government, through RBZ is unable to allocate enough foreign currency to cover these obligations. On the other hand, if Delta sold their products in RTGS and Bond Notes, they cannot purchase forex on the black market because it is illegal to do so. Without adequate raw materials, supply is diminished and the company suffers. The employee is not spared as their job hangs in the balance. Also, the shareholder will be disillusioned by unpaid dividends leading to less foreign investment in the country.

The retailers are also left to figure out how to survive. It is highly unlikely that they will charge in forex alone, hence they would need to think outside the box to ensure survival. This is the reason why we saw retailers last night already starting to remove Delta products from their shelves while they wait for the US Dollar regime to kick in so that they price their products accordingly.

Whichever way one looks at it, a showdown looms on Friday as both government and Delta have put their cards on the table for all to see. Both parties need to tread carefully because this is very sensitive ground. On one hand, the government is determined to preserve its policies as well protect the Bond Note, on the other, Delta and other companies are fighting for survival. The die is cast.