ZIMBABWE Stock Exchange-listed food processor Dairibord Holdings says sales volumes for milk were up 11% during the quarter ending 30 September compared to the corresponding period last year due to firm market demand and improved production efficiencies.
The company processed 22.4 million litres in the nine-month period under review, 13% above the comparative period last year.
This, the company added, was ahead of the 10% growth in national raw milk production as reported by the Dairy Services Department.
Despite reporting improved volumes, the company expressed concern over the on-going shift of consumers to the informal sector.
“The period under review remained challenging, marked by tight liquidity for both US$ and ZW$,” the company says in its quarterly trading update.
“Due to the stability of the exchange rate, month-on-month inflation decreased, with consumer prices remaining relatively stable throughout the quarter. However, there were exchange rate disparities which resulted in significant disparities which resulted in significant migration of customers to the informal sector, impacting competitiveness and demand in the formal channels.”
Harare, like other major cities and towns, has witnessed the growth of buoyant informal sector retailers that are giving headaches to established operators.
Analysts say formal manufacturers and retailers should change their business models and take advantage of economies of scale as well as distribution channels.
Economies of scale are cost advantages reaped by companies when production becomes efficient. Companies can achieve economies of scale by increasing production and lowering costs.
This happens because costs are spread over a larger number of goods. Costs can be both fixed and variable.
Just recently, ZSE-listed retailer OK Zimbabwe undertook to improve its operating efficiencies to counter the growing threat posed by the informal sector literally operating on its doorstep.
The company hopes the measures will help the business claw back market share and improve on profitability. — STAFF WRITER