Dairibord optimises operations, eyes regional expansion amid economic headwinds

CLOUDINE MATOLA

Zimbabwe’s largest milk processor, Dairibord Holdings Limited, is aggressively pursuing operational optimisation and regional expansion as it navigates a challenging economic environment marked by shifting regulations, exchange rate volatility, and cost pressures.

The company is investing in technology upgrades, securing raw milk supplies through local sourcing strategies, and expanding its footprint beyond Zimbabwe’s borders—particularly through exports and toll manufacturing arrangements in South Africa—as part of a broader strategy to boost resilience and sustain profitability.

 Dairibord chairman Josephat Sachikonye outlined a strategic roadmap that prioritises operational efficiencies, cost containment, and foreign currency earnings through regional market development.

“The group continues to navigate a complex and volatile environment characterised by evolving regulatory policies and currency fluctuations. High input costs, an onerous tax burden, and pricing pressures remain key challenges. To mitigate these impacts, the group is optimising operations, investing in capacity enhancement, and leveraging technology to strengthen product offerings,” said Sachikonye.

He added that regional expansion remains a critical priority in the company’s growth strategy, with a focus on boosting export volumes and advancing a toll manufacturing model in South Africa to reduce currency risk and enhance access to stable markets.

“A strong emphasis is being placed on regional expansion through export growth and the toll manufacturing model in South Africa to diversify revenue streams and increase foreign currency earnings,” he said.

Like many Zimbabwean corporates, Dairibord has been operating under strenuous macroeconomic conditions. These include currency depreciation, power shortages, and high inflation, all of which have increased the cost of doing business.

The company cited adverse impacts from new regulatory and tax measures introduced in the reporting period. In particular, the reclassification of milk under the Value Added Tax (VAT) regime and the imposition of a special surtax on beverages with high sugar content placed pressure on margins.

“The group faced significant cost pressures from new legislative and regulatory pronouncements. The VAT reclassification of milk (US$0.63m) and the Special Surtax on Sugar Content in Beverages ($2.26m), impacted profitability,” Sachikonye stated.

Despite these headwinds, Dairibord posted a substantial increase in net profit for the year to December 31, 2025, recording US$3.78m—up from US$1.03m in 2023. The growth was largely attributed to revenue expansion and improved volume performance in core product categories, which offset some of the adverse cost impacts.

However, operating profit declined to US$6.2m from US$10.3m recorded in the prior year, primarily due to elevated selling and distribution expenses as well as increased fuel consumption necessitated by prolonged power outages.

The company achieved a solid top-line performance in 2024, with revenue growing to US$126.75m from US$107.83m in the previous year.

This 18% increase was underpinned by a 10% rise in consolidated volumes, driven by robust demand in the liquid milk and foods segments.

Food product sales volumes surged by 47%, supported by increased uptake of products such as Yummy yoghurt and ice cream. Additionally, the company reported that improved product availability led to higher sales of Rabroy tomato sauce.

The company also benefited from a strong shift toward hard currency transactions. US$ -denominated sales contributed 83% to the total sales volume, up from 79% in 2023. This shift significantly reduced the company’s exposure to Zimbabwe’s volatile local currency and provided a buffer against inflationary pressures.

Exports also remained a bright spot in Dairibord’s performance.

Export volumes grew by 13% year-over-year, contributing 8% to total sales revenue, compared to 6% in the previous year. This trend reinforces the company’s strategy to diversify away from the domestic market and scale operations regionally.

As part of its strategy to mitigate the effects of macroeconomic instability and input cost inflation, Dairibord is placing strong emphasis on operational efficiency and supply chain resilience.

“Cost reduction remains a strategic priority, with comprehensive measures underway to minimize expenditures. Furthermore, securing a stable, low-cost raw milk supply through robust out-grower support programs is essential for maintaining competitive advantage,” Sachikonye noted.

The company has been working to enhance its milk supply base through farmer development initiatives and strategic partnerships with local producers.

By supporting smallholder and commercial dairy farmers through technical assistance and guaranteed off-take agreements, Dairibord aims to ensure consistent supply of raw milk at competitive prices.

At the same time, the company is investing in modernising its production facilities and leveraging digital technologies to enhance efficiency across the value chain—from milk collection and processing to distribution and sales.

Regional expansion remains a cornerstone of Dairibord’s long-term strategy, as the company seeks to tap into new markets and reduce reliance on Zimbabwe’s constrained economic environment.

The toll manufacturing model being implemented in South Africa is expected to play a key role in this expansion drive. The arrangement allows Dairibord to produce and distribute products within South Africa using existing third-party infrastructure, thereby avoiding the capital intensity of setting up new facilities while benefiting from proximity to a more stable market.

This model also enables the company to respond more nimbly to consumer demand in the region, reduce logistical costs, and enhance brand visibility beyond its home market.

Exports to regional markets—particularly Southern African Development Community (SADC) countries—are expected to continue growing, with management indicating that foreign currency revenues from exports are becoming increasingly important for the sustainability of operations.

Looking ahead, Dairibord’s management remains cautiously optimistic despite the external challenges.

The company intends to continue investing in capacity enhancement, digital innovation, and route-to-market strategies that position it for long-term growth.

Management is also calling for more consistent regulatory frameworks and supportive government policies that foster private sector growth and protect local manufacturers from unfair competition and policy uncertainty.

The dairy processor’s resilience in the face of Zimbabwe’s economic turbulence speaks to its strong market positioning, brand equity, and operational agility.

Its strategic investments in technology, supply chain development, and regional growth position it well to withstand further macroeconomic shocks while seizing emerging opportunities across the region.

With consumer demand for nutritious dairy and food products remaining strong despite income constraints, Dairibord is banking on its diversified portfolio and robust operational framework to continue delivering value to shareholders and stakeholders alike.

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