Dairibord Holdings turn to toll manufacturing

LIMITED supplies and a relatively high cost of raw milk has forced Zimbabwe Stock Exchange-listed manufacturing company Dairibord Holdings into toll manufacturing, as problems confronting the economy continue to make local companies uncompetitive.

Report by Bernard Mpofu

Group chief executive officer Anthony Mandiwanza last week told an analyst briefing that the decision to produce cartonised Chimombe milk (through toll arrangements), was part of the group’s plans to contain overhead costs.

DH profit after tax for the year ending December 31 2012, remained flat, year-on-year, at $7 million.

“The key focus of attention for the business going forward is on cost realignment, which entails rationalisations of our factory operations. Where we were duplicating production, we will centralise that,” Mandiwanza said.

“The benefit that arises out of that is enormous. That would give us an enormous benefit through rationalisation. We also looked at the issue of milk production in the geographical area where our factories are located.”

The misalignment between overheads and volumes of activity, Mandiwanza said, had impacted on the operating costs for the business.

Currently a litre of milk costs 62 cents locally compared to an average 40 cents in South Africa. This has resulted in local companies struggling to compete with imported milk products.

Mandiwanza said high utilities, labour costs and a smaller herd of dairy cows had resulted in the limited supply of milk as well as the high cost of production.

13 Responses to Dairibord Holdings turn to toll manufacturing

  1. Yarleba March 25, 2013 at 9:35 am #

    Kunyepa kwako! You guys a fleecing the milk producers sic. What you dont realize is that failure to support producers kills your business. Mukaka comes from the farmers. .simple as that.

  2. RudeBoy March 25, 2013 at 10:14 am #

    As mentioned before, Dairibord going the Cairns route. Another 2 years and this company will be gone.

  3. TICHARWA March 25, 2013 at 11:43 am #

    Mandiwanza and your guys watch out we are going to boot you out of DZL soon,looters

  4. WILLARD MUBVUMBI March 25, 2013 at 11:50 am #

    Either you find VERY good dairy farmers whom you support or relocate to neighbouring countries where there are good dairy farmers. The problem here is, you are running in short of raw milk supply.

  5. jon March 25, 2013 at 12:06 pm #

    Makadzinga mafarmers chaiwo nhasi tava kushaiwa mukaka. What goes around comes around.

    • munjanja March 25, 2013 at 12:28 pm #

      Mostly the problem is competition. They used to have monopoly but now kune DEndairy, Keshelmar, Gushungo etc. These used to supply Dairyboard. Any farmer who has the capacity to produce good volumes would rather set up his own small milk processing plant to maximize on returns. That’s why there are many small brands mu market.

      • respect m March 26, 2013 at 6:49 pm #

        agreed…well said

  6. WILLARD MUBVUMBI March 25, 2013 at 2:50 pm #

    @Munjanja, a very good point. I also agree.

  7. Chibatamoto March 25, 2013 at 3:16 pm #

    Retreat further Mandiwanza so as to manage your overheads. kuvhara BYO and Mutare alone is not enough. kwekwe company is hot, AnO yauya kuipa, kefalos and many other milk producers will always vertically intergrate mosara musina pekubata. the battlefield is hotter re-invent yourselves. Do 30% own production of milk like others and come up with better looking products. you continue to vortex without taking off!

  8. Mukanya March 26, 2013 at 8:08 am #

    Dendairy is the major threat whilist mandiwanza is crying dendairy is capitalizing on his shrinking

  9. Musiso March 26, 2013 at 2:47 pm #

    Dairibord appears to me to be reactive to the circumstances instead of crafting a long-term vision. For a long time the company and others in the milling industry benefited immensely from a rigid and exploitative model where commodities were acquired at low prices from farmers, sometimes with the help of central government. Thus these companies have not been aggressive, particularly in securing raw material supplies, but rather relied on farmers’ own investments. However, that model collapsed with advent of land reforms, especially when farmers could not access funding from both government and banks. The rest is history, but that was the beginning of excess capacity at Daribord and other milling companies. It is a tall order but doable proposition for Dairibord to embark on heifer development program to safeguard its raw milk supply- the challenge is that the resources required are obviously beyond the capacity of the company, especially in the short-term to medium term. There danger now is that competition is building up and it’s building up very fast. How is the company going to regain it’s market share?

  10. respect m March 26, 2013 at 7:50 pm #

    not a spammer hey

  11. Zimbabwean March 26, 2013 at 9:23 pm #

    Musiso, I agree with you entirely. DHZ has to move with changing times. They have behind. Remember Wimpy, they were around first before these nandos but they could not keep up

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