A battle between two goliaths is looming in the beverages sector in Zimbabwe. The world's second-largest food and beverage company by revenue, PepsiCo, is preparing to take on Delta Beverages, which has a large presence in Zimbabwe.Delta, a unit of ABInBev, which recently acquired SABMiller, has had a monopoly in Zimbabwe's beverage market for the past 70 years. But its operations have lately been subdued because of the country's economic meltdown . It blamed weak macroeconomic fundamentals, falling per capita incomes, cash shortages, tight money withdrawal limits, delays in salary payments and significant policy shifts that have buffeted the business environment .Economic observers said this week that the decision to enter the Zimbabwean market by Varun Beverages, which runs bottling plants for PepsiCo, was "very brave", given the operational conditions faced by its largest rival and the shrinking buying power of consumers.story_article_left1"Delta is already under pressure because of a decrease in sales. It is a strange move by PepsiCo to think they could capture the same market, unless they are taking a long-term view of their operations," said independent economist John Robertson."What we might see are price wars in the beverages market, as the prices being charged are very high. In the long run, it is the consumers who will get access to wider ranges at lower prices."Varun Beverages - owned by Indian tycoon Ravi Jaipuria, who has an estimated net worth of $2-billion (about R28.5-billion) - started construction last month on its PepsiCo plant in Harare.The plant, which will cost $30-million to build, is expected to be completed in the second quarter of 2017. It will provide 300 to 400 direct jobs and up to 3,000 in indirect employment.At peak production, the plant will be able to fill 600 glass bottles a minute and 400 cans a minute.Varun Africa CEO Krishnan Shankar is optimistic about the prospects of doing business in Zimbabwe and brushed aside the monopoly enjoyed by Delta Beverages."We have done it in Zambia, where we moved in and now control 30% of the market, and we will be able to do it in Zimbabwe. There is no challenge which is big or small; a challenge is just a challenge," Shankar said this week.He added: "There is huge potential in Zimbabwe for two players to operate. In Zambia, the entry of Pepsi resulted in the doubling of the soft drink industry and both the established leader and Pepsi recorded growth."Shankar said the market in Zimbabwe would grow, resulting in higher revenue for the government through taxes and new jobs. "There are currently challenges in the country but we as a group do not look at short-term problems."Varun Beverages also has operations in Mozambique.Robertson said that given its presence elsewhere in southern Africa, its entry to Zimbabwe was curious."But they are a very experienced and aggressive company and it seems they have faith that things will come around here," he said.How PepsiCo intends to upset Delta Beverages is a closely guarded secret. Shankar was unwilling to let anything slip.story_article_right2But while PepsiCo may be plotting how to turn the tables on its rival, Delta, listed on the Zimbabwe Stock Exchange, is not resting on its laurels. Preparations are under way for the commissioning of two Delta plants, in Masvingo and Kwekwe. The plants are being upgraded at a cost of $14.5-million each."We will commission the Masvingo plant on October 25 and Kwekwe will be a bit later," said Alex Makamure, Delta's corporate secretary. "There were delays by the suppliers of the equipment and fears about the bond notes as they were trying to establish what was happening, but they are OK now."Delta Beverages has to date invested $78-million in plant upgrades for its Chibuku Super beer. The brand has a 60% share of the opaque beer market. Opaque beer sales have overtaken lager beer sales because opaque beer is cheaper.Meanwhile, the company said it did not anticipate any changes to its operations in Zimbabwe under ABInBev. "Delta Corporation has been an associate of SABMiller and will become an associate of the new enlarged entity," it said."We do not anticipate any material changes to the current relationship between Delta and the combined group following completion of AB InBev's recommended combination with SABMiller."..