African markets

Zimbabwe: Dairibord targets the South African market

Dairibord Holdings intends to start exporting to South Africa as it seeks to increase its exports and generate more foreign exchange needed for key imported raw materials and equipment.

The group’s chief executive, Antony Mandiwanza, told an analyst briefing on Wednesday that the group aims to drive more products to cash sales as suppliers now demand payment up front when 75% of its sales are on credit.

“We want to enter the region through our brands and if we can establish ourselves in the regional markets, the brand story will lead us to make a physical investment decision.

“We are exporting to Zambia, Mozambique, Botswana, and now we are finding our presence in South Africa through informal channels, but our presence there certainly gives us an area of ​​opportunity,” he said. .

He said demand in South Africa was mainly the result of informal supply channels; by traders who simply buy the products and transport them across the border.

However, the CEO of Dairibord maintains that the most sustainable thing is to reorganize the supply chain and have a formal presence in the neighboring country of Zimbabwe.

“. . . not necessarily building structures in South Africa, but signing a distribution contract so that we formalize our route to South Africa in preparation for the African Free Trade Area,” Mr. Mandiwanza said.

He said the group had not yet signed a specific distributor to export its products to South Africa, but stressed that the potential was there.

“Our team led by Trymore Chikomo was in South Africa earlier this year talking to potential distributors, some of whom are very promising and exciting,” he said.

In the fiscal year ended December 31, 2021, the group’s sales volumes increased by 48%, which the company described as the best of the past five years. Of the total volumes, 20% were exports.

He said the products currently in demand in the South African market are Pfuko Maheu, Cascade and Steri-milk.

Mandiwanza said the company’s revenue for the year, at $10.63 billion, was up 190% on the back of significant volume growth and moderate pricing adjustments.

Raw milk used in its operations increased by 1% to 27,488 million liters while sales increased by 48% to 94,185 million liters.

“Some of our major volume movers, Pfuko, Cascade, we experienced supply bottlenecks and so capacity was limited, we would have done more.”

Mr. Mandiwanza said the profit margin was constrained during the year due to cost issues and on foreign currencies the group exploited nostro transactions, exports and the auction system.