Inadequate milk supplies worry Dairibord

MILK processing giant Dairibord Holdings Limited (DHL) this week raised concerns over a demand-supply gap in its products due to inadequate milk supply, giving rise to arbitrage opportunities.

The Zimbabwe Stock Exchange-listed group manufactures a diverse range of products, including liquid milk, foods and beverages.

These are marketed and distributed in the domestic and export markets.

In its 2022 annual report, DHL said inadequate milk supply in the country was a major concern.

Zimbabwe produces about 91,6 million litres of milk per year, against a national demand of 120 million litres.

"There has been a demand-supply gap in Dairibord products due to factors such as inadequate milk supply, giving rise to arbitrage opportunities, smuggling of products outside the country and unregulated vendors," the report reads in part.

"To mitigate these challenges, we closely monitor channel prices and strategically allocate stock to minimise the negative impact of product shortages.

"Our cash and perishable food handlers receive training on proper product handling and behaviour to minimise losses.

"We believe that providing quality liquid milk, foods and beverages at a competitive price is of paramount importance. Our marketing strategies reflect this through various media channels and sales promotions.

"The goal is to continuously enhance our marketing practices and ensure that our communication lines are ethical, non-offensive and aligned with our product attributes and features," the report states.

DHL said it continuously evaluates the effectiveness of its marketing and product labelling efforts by tracking a range of performance indicators.

"Our ultimate objective is to secure the first or second position in market share in all categories we compete in. We strive to maintain our consumers' trust by providing quality products, accurate information and responsible marketing practices," it states.

"Continuous improvement and innovation in our marketing and product labelling efforts to enhance our customer satisfaction and stakeholder approval remain a priority."

Despite a 14,81% increase in national milk production, DHL chief executive Mercy Ndoro said growth in the milks category remained constrained.

This was mainly attributed to a decrease in Steri Milk production due to blow moulder challenges, as well as reduced production of the cultured milk brand, Lacto.

The Foods category recorded a year-on-year volume growth of 10%.

This was as a result of increased uptake of Yummy yoghurt and Rabroy tomato sauce, she said.

Ndoro  said  beverages  sales volumes grew by 7%  compared  to  prior year, driven by outstanding performances  from Fun ‘n Fresh and Pfuko Flavoured Maheu.

During the year under review, the business launched the ambient 400ml Cascade, the product's key advantages being extended shelf-life and cold-chain independence.

The business also launched a baobab dairy fruit mix, an innovative line extension under the Cascade brand.

This was in line with food and beverage trends of increased consumption of products containing natural ingredients.

In addition, the introduction of Cascade baobab enabled product variety and effective targeting of various market groups.

The group recorded inflation adjusted revenue of ZW$63,38 billion (US$94,4 million at the then rate of US$1:ZW$671,44) during the financial year ended December 31 2022, a 40% increase on the comparative period.