Delta Speaks On Competition On Chibuku From Innscor's Nyathi

Matlhogonolo Valela, the CEO of Delta, has stated that the company has not felt any pressure from Innscor‘s last year launch of Nyathi beer, which was seen as a potential challenge to Delta’s dominance in the market. Valela claims that Delta still holds a 93% market share, only slightly down from the 94% they had in September 2022. He also mentioned that Delta has recently built a new Chibuku plant to increase production.

He said when Delta were the only ones in the market, they sold about 1.6 to 1.7 million liters per year, and both consumers and ourselves were satisfied. Valela added:

All of a sudden the numbers I’m showing you suggest that market has almost doubled with the arrival of competition. So you become more intense and consumers have got choice, and everyone is happy. So we welcome competition. The competitor has put up a small blight relative to ours and I think it’s early days for them to actually have made a dent on what we do. When we look into their numbers compared to our numbers, they are still too small to even worry about what market share they have got.

Valela also mentioned that based on statistics they received from suppliers who serve both Delta and Innscor, it is estimated that Innscor has a production capacity of around 30,000 hectoliters per month. In comparison, Delta is selling around 350,000 to 400,000 hectoliters per month. One hectoliter is equal to 100 liters. Valela believes that Innscor has not fully utilised its capacity yet and still considers them insignificant at this stage.

According to some analysts, Valela mentioning Innscor indicates that their beer brand, Nyathi, is making progress in Delta’s market. Some critics of Delta argue that Valela’s analysis demonstrates how big companies can be overtaken. They suggest that instead of comparing total market share, Valela should focus on the rate of growth. They also point out that Valela should pay attention to the outlets that Delta is not supplying due to credit control problems, as these are the areas where the competition is entering. They suggest that innovation in managing credit could be a key factor in handling the competition.

Innscor announced in late 2022 that they would be launching Buffalo Brewing Company, which would introduce the Nyathi beer brand into the market predominantly controlled by Delta Beverages. At that time, Delta held 86% of the traditional beer market and 95% of lager sales. When Innscor announced its entry into the brewery industry, Delta responded by introducing new variants of its Chibuku brand, such as Chibuku Scud Plus with a longer shelf-life, and Chibuku Super with a banana flavor. The company has also launched new beer brands like Sable. 

There have been rumors of a potential partnership between Delta and Heineken, although Heineken recently acquired Distell, which owns Afdis, a Delta associate. Delta has shown its ability to fend off competition in the soft drinks market, facing challenges from Varun Beverages, the maker of Pepsi, and Innscor’s Fizzi brands.

For Innscor to effectively compete with Delta in the traditional brew market, they will need to focus on utilizing their value chains and distribution networks, as well as offering competitive pricing and maintaining high product quality. Additionally, Innscor may consider investing more in sorghum farming to ensure a steady supply of ingredients. This could be achieved through their farming unit, PHI Commodities, which currently operates three farms and is expanding.

On the other hand, Delta obtains its barley and sorghum from local farmers through contracts. In 2021, they purchased 40,000 tonnes of barley from 47 farmers and received 13,500 tonnes of sorghum from 10,000 communal farmers and 50 commercial farmers.

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