Dendairy diversifies product range, seeks to optimise export market opportunities
HARARE -Milk and dairy products producer, Dendairy says it will invest in new product lines to expand its product portfolio this year. The company is also diversifying its product range with a view to expanding its export market across the region.
Dendairy currently produces fermented milk (Maas), UHT milk (including flavoured), yogurts, ice cream, and fruit juices. The company has been currently exporting only to Mozambique.
“Dendairy will be launching some new products this year which extend on our current range. The Zimbabwean consumer has limited discretionary spend. Our primary objective is to make the same products more efficiently and deliver the savings to the consumer,” said the company’s director, Daryl Archibald, in an interview.
On exports, Archibald however said that it is currently difficult to access the inward processing rebate, yet there are significant duties applied to the packaging and some ingredients, which ultimately make local products uncompetitive for export.
“For now we have priced our exports assuming these difficulties will be overcome. If we don’t achieve the rebate, all exports will be done at a loss,” he said.
Archibald said the SI64 legal instrument, introduced by government to restrict selected imports last year, has helped companies increase capacity utilisation and has also created significant investments into the industry.
He said there are now two Tetra Pak boxing plants operating in Zimbabwe and there is a third one set for commissioning.
“However, the biggest challenge for manufacturers is the significant backlog in foreign payments. This is a result of numerous years of importing more than we export,” he said.
Archibald said in the 2016/17 agricultural season farmers have had a blessing and a curse with the high rainfall. He said the rains have caused animal health issues which reduce milk production but, on the other side, have produced substantial grazing around the country, which has reduced total feed costs.
Latest data from the Dairy Services Department in the Ministry of Agriculture show that Zimbabwe’s raw milk production for February 2017 dropped 12,7% to 4,39 mln litres compared to 5,03 mln litres achieved in February last year.
Milk production in 2016 reached 65,36 mln litres, which was a 13.5% growth from prior year’ s 57,54 mln litres and it is targeted to rise to between 97 mln and 100 mln litres per annum by 2019, leveraging on increased national herd and sectoral protectionist measures.
A Scandinavian backed Sub-Saharan Africa focused private equity investment company, SPEAR Capital, acquired a 27% stake in Dendairy under a debt and equity transaction.
The transaction was valued at $6 million. Dendairy has invested heavily in its factory and grown its raw milk supply since its establishment in 2004. The company has continued to grow its market share within the Zimbabwean market, and also expanded its footprint into the region.