This time last year, 39% of sales at Dairibord were in US dollars. Now, according to the country’s biggest dairy processor, USD sales were up 68% in the first quarter, and now make up 58% of revenue.
Zimbabweans are increasingly using the US dollar, ditching the Zimbabwe dollar which has been eroded yet again by high inflation. A tough monetary policy meant to contain inflation last year only sped up the flight to US dollars as it drained the market of Zimdollars.
Like many manufacturers, Dairibord says it sells most of its products direct to the informal market, where traders pay suppliers almost exclusively in US dollars. This is because formal retailers such as Pick n Pay and OK Zimbabwe are forced to use only the overvalued formal exchange rate, which makes goods more expensive for shoppers when they use US dollars.
Dairibord increased its sales by 14% in the first quarter, with the beverage unit, now the company’s biggest earner, growing fastest at 20% over the period. Foods contracted by 8% while milk rose by 7%.
“Volumes sold in USD increased by 68% to 15.3 m litres and accounted for 58% of the total sales up from 39% in the same quarter last year,” Dairibord says in a trade update for the three months to March.
The company has spent US$30 million on expanding factory capacity over the past five years, according to CEO Mercy Ndoro. The company expects more sales growth this year, as it benefits from its investments.
“Volume growth in 2023 will be underpinned by recently completed capital investment projects which include a third maheu (Pfuko) line, a drinking yoghurt (Yoggie) line and a third blow moulder for Steri milk bottles. In addition, a new chilled water plant was installed at the Harare Rekayi Tangwena factory to optimize production capabilities,” Dairibord says in a market update.
While Dairibord now makes most of its profits from beverages, it is still the largest milk processor in the country, despite growing competitors such as Pro Dairy and Dendairy. Dairbord processes 33% of all the raw milk from farmers.
Zimbabwe’s milk production increased was 91.3 million litres in 2022, up from 79.6 million 2021, according to the Zimbabwe Association of Dairy Farmers.