Dendairy started out relatively small and has now become one of the biggest milk processing companies in Zimbabwe. Could you tell us more about Dendairy’s growth story?
The company was founded in 2004 by my uncle, Darren Coetzee. It was a bit of a contrarian investment during such a tumultuous time in Zimbabwe, but the proof is in the pudding.
The period from 2004 to 2009 was a troubling time in Zimbabwe due to hyperinflation, political unrest, and a lot of other economic challenges. During this time we were producing around 300 000 litres a month and we had expanded our production to include maas (fermented milk) and yoghurt. Between 2009 and 2014, we expanded our product range again to include products such as long-life milk.
But, in 2013 we ran into some significant issues with the commissioning of our turnkey plant which resulted in us having to throw away a lot of product and this put us under financial strain. This challenge pushed us to find a partner that would be able to help us address this problem and get out of this situation. Spear Capital provided us with the capital we needed to expand our facilities at our dairy processing plant in 2014 and we were able to grow substantially from then on. However, in 2018 Zimbabwe went through another bout of hyperinflation which introduced new challenges into the business.
Over the past three months, both Martin and Nyaradzo from Spear have stepped up and provided meaningful help on the financial side to deal with the challenges brought on since 2018, and we have now started to grind our way back to once again being in a strong position. Although we’ll probably only be back to 80% of the volumes we peaked at in 2018 by the fourth quarter of this year, we’ll soon be setting new highs around March or April next year.
What is the significance of dairy in Zimbabwe?
Dairy is a crucial element of nutrition, particularly in developing countries like Zimbabwe where people just can’t afford to eat ten different types of unprocessed (healthy) foods in a single meal. It’s also an affordable source of protein that provides the full range of amino acids needed in a healthy diet. The best sources of protein include – from highest to lowest cost – beef, pork, chicken and eggs, dairy, fish, and then soya beans. Additionally, maas is a staple protein in Zimbabwe which is eaten with mielie meal in the summer – this is switched out with chicken in the winter.
Dairy is also right up at the top of the list for the World Food Programme’s recommendation for infants no longer breastfeeding and children under the age of 12 in developing countries. This is because dairy is the most similar food to breast milk, providing fats, protein, carbohydrates, and the vitamins and minerals needed for growth.
How has Dendairy been impacted by the drought crisis in Zimbabwe?
Zimbabwe is unique in that it has exceptional water resources, so any challenges related to water comes secondary to power supply. The biggest concern for us is that we need decent wheat and cotton crops as the byproducts of these crops to go into animal feed. Cotton hasn’t been funded very well in Zimbabwe and its centralised control has meant that cotton production is very small, leading to the cost of food being significantly higher than it should be.
To mitigate this, we’ve invested in growing lucerne on our farm in Kwekwe which is a substitute for wheat and cotton byproducts at around a 20-30% lower cost to our farmers. This is one of the ways in which we’re making the business more sustainable. By growing our own feed for our own farmers close to farm, we’re minimising the amount of transport required, our dependence on borders and foreign currency, and essentially creating a circular economy. For example, the manure from our dairy farms goes onto our lucerne lands, dropping our fertiliser requirements by about 40%, and the lucerne supplies byproducts which are typically manufactured 200 to 300kms away so there’s a massive transport saving. Lucerne also makes animals healthier as it’s like eating veggies compared to eating just carbs.
What are Dendairy’s future growth plans?
Zimbabwe’s economy is growing very quickly at the moment and we can see this reflected in the changes to consumer consumption. People are now consuming more high-end dairy products, such as ice cream and yoghurt, which they hadn’t been consuming for a while. We’re hoping to raise Zimbabwe’s dairy consumption from one litre per person per month to three litres per person per month, which is how much the country should be consuming at a minimum nutritional level. To put this into perspective, milk consumption in South Africa currently sits at six litres per person per month, and in Scandinavia it’s close to one litre per person per day.
Additionally, as the only local producer of 100% fruit juices in Zimbabwe, we’re hoping to shift our supply of fruit juice pulps locally in the future as the country has very large orange orchards which could provide the base ingredient for our juices. At the moment, however, our focus lies in riding the dairy wave across the products we currently have, pursuing some product extensions, and building our fruit juice milk blend to offer a drink selection that is healthier than soft drinks.