KENYA – A focus on delivering new products to the market and increased investment in research and development (R&D) have enabled Dairibord Holdings to weather the tough economic environment in Zimbabwe, says the Group R&D Executive of the company, Charity Magwenzi.
The economic situation in Zimbabwe is well known by those with an interest in Africa, but how has the Dairibord Holdings, the country’s biggest dairy and beverage provider, responded to the challenging environment?
“The ultimate game changer for any company is R&D. It can change the course of a company, from loss to profitability. A food company cannot achieve its full potential without R&D. R&D pays for itself,” she advices.
“At time of crisis, I advice food companies to invest more in R&D. Some say that R&D is a cost centre, but this is not the case if done right,” she adds.
Charity made the comments at the recently concluded AFMASS Eastern & Central Africa Conference & Expo in Nairobi, Kenya.
Charity believes that the company’s focus on R&D by the listed food manufacturer has been a major contributor to the company’s capacity to weather the storm and retain or grow market share.
The level at which R&D is located in the organisation’s hierarchy is critical in making R&D successful in any company, she advices.
“R&D is a strategic decision by the company. It can’t be left to a low level employee. For this function to succeed, it must be placed high up the chain in the company structure.
If the Managing Director can take charge of R&D, so be it,” advices Charity, who reports directly to the Managing Director, and is part of the core management team at Dairibord Holdings.
“Our strategic focus as a department is on revenue growth, cost leadership, formulations and packaging. We talk about cost leadership, not cost reduction since we must be the lowest cost producer in the market,” she says.
“R&D costs money but our company has realized that the cost of R&D has been nearly balanced with the savings in costs, not including the increased sales coming out of the new products that we have launched over the years.
“We have saved over US$1 million in the last 4 years to the company, delivering real and measurable value to the company,” she reveals.
The revenue of new products has also grown to 15% of total company revenue, from 5% just some few years back.
“The company has over the year’s appreciated the contribution we have made to the bottom line because the management can measure our success; goals have been clearly defined and tracked by the company to ensure we are on track,” she adds.
Apart from developing higher value products like premium ice creams and beverages including bottled water, the company has also introduced a range of traditional products that have been well received by the market.
“Our R&D has also taken a deep look at traditional African food products in our innovation approach. For example, our Pfuko sorghum beverage is a traditional Zimbabwean product that we introduced recently, and has done extremely well in the market.
“When it comes to the development traditional food products in Africa, local companies like Dairibord have an edge over foreign competitors. We have been trailblazers in our market due to our focus on some of these products,” she adds, noting that the nostalgic nature of these traditional products provide a great opportunity to food and beverage processors.
The company has also gained a lot from working with suppliers who have been of great support in delivering their goals.
“Suppliers reduce the cost of R&D, for they have facilities like pilot plants and a deeper knowledge of their products and processes. Some have also provided marketing support for some bigger projects,”
About AFMASS Eastern & Central Africa Conference & Expo
The AFMASS Eastern & Central Africa Conference & Expo is organized by FoodWorld Media Ltd, the publishers of the African food and beverage industry focused magazines Food Business Africa, Dairy Business Africa and Agri-Business Africa, among other publications.
The 2016 edition of the premier industry trade event took place at the Kenya School of Monetary Studies in Nairobi, Kenya from June 8-10, 2016.
The event brought together over 350 industry business leaders, suppliers to the food and beverage industry, Government regulators and NGOs involved in the food supply chain from Africa, Americas, Europe and Asia to deliberate on ways to improve food processing, food packaging and food safety, with a focus on Eastern and Central Africa.
The next AFMASS Eastern & Central Africa Conference & Expo is planned for March 22-24, 2017 in Nairobi, Kenya.
A few significant changes in 2017 will see the set up of one exhibition, but with two parallel conferences:
1) The African Food Manufacturing & Safety Summit (AFMASS) Conference will focus on the beverage; dairy; baking & snacks; fruit and vegetables; sugar and confectionery; meat; and other processed food sectors;
2) The newly introduced African Grains, Milling & Feed (AFGRAINS) Conference will cover the formulation, post-harvest management, processing, packaging and food safety in grains, milled products and animal feed.