Beverages now carry Dairibord’s future growth as milk shakes

Dairibord sales volumes grew 11% in the first half of the year, driven by growth in non-dairy units, but costs are overspilling and the traditional milk business is soured by lower milk deliveries.

The company says 40% of its sales are in foreign currency, with 8% of this being in the export market.

The company has its roots in dairy, but its beverages business – which includes brands such as Pfuko/Udiwo Maheu and Cascade – is now more than two times larger than the milk business in terms of sales volumes.

Milk contributed 28% to Dairibord’s sales volumes. The foods business – which includes brands such as Lyons Peanut Butter – accounts for 10%. The largest business unit by volume is the beverages, at 62% of sales volumes.

“This affirms the growing contribution of non-milk product categories and product portfolio diversification, in line with our ‘more than just milk’ strategy,” Dairibord says in its latest results.

Last year, beverages accounted for 59% of sales volumes while milk was at 32%. A decade ago, milk accounted for 37% of Dairibord’s volumes while beverages’ contribution was 46%.

In 2014, Dairibord opened its maheu plant in Chitungwiza, doubling the plant’s capacity a year later as demand rose. Last year, the company decommissioned an old plant and installed a new one for its foods unit, which makes yoghurt and ice cream.

The investment has seen sales volumes for beverages and foods rising, at a time the milk unit is under pressure mainly from rising costs, especially on stock feeds.

Future growth

Dairibord says future growth “will be largely driven by the beverages and foods, benefitting from the commissioning of plant and equipment for additional processing capacity in the third quarter of the year”.

Despite growth in its other businesses, Dairibord still controls the biggest share of the milk market.

Zimbabwe’s first-half 2022 milk intake by processors rose 17% to 38.96 million litres from 33.42 million litres over the same period last year. Dairibord bought 32% of this milk, despite its milk intake falling 7% in the first half of this year.

According to Dairibord: “The Group has elevated initiatives for aggressive milk supply development for low cost and high-volume milk production.”

In 2020, Dairibord announced that it had entered a partnership with Tavistock, its biggest milk supplier.

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