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Harare – The partnership between South African grocery chain, Shoprite and Zambian meat producer and processor, Zambeef, is bearing fruit.
The SA retailer is now expanding further into Africa with new distribution partnerships aimed at tapping into previously unexplored areas.
Zambeef, the London and Lusaka listed meat processor, on Wednesday reported a 72% jump in operating profit to $13.7m in USD terms. Inside Zambia, it had opened two new macro outlets while a further two were upgraded.
But it is the partnership with Shoprite, under which it has opened in-store butcheries in West Africa and in Zambia that is set to continue having a positive impact on growing income. Zambia has over the past year faced electricity shortages, a severe drought and projected slow-down in economic growth
"The Group continued to benefit from its concession agreement with Shoprite for in-store Meat Market butcheries in Zambia and West Africa. Shoprite has expanded with seven new stores in Zambia and West Africa," Zambeef said on Wednesday.
The rapid expansion by Shoprite of its footprint across the Africa region is in line with strategies adopted by other SA retailers such as Pick 'n Pay and Woolworths that are tapping into the same market. Experts say this has been necessitated by growing competition back home.
However, other analysts warn that the Africa market has its problems such as legislation, supply chain challenges and demands to pick stock from local producers that are sometimes incapacitated.
But for Shoprite, the expansion bid appears to be on solid grounding, especially with tie ups with African producers and processors.
"A further seven Shoprite stores are due to open before the end of the year." In Zambian Kwacha terms, the Zambeef operating profit was a massive 200% up.
Jacob Mwanza, chairperson of Zambeef, described the profit position as an “excellent interim operating performance” that had been “achieved within a challenging macro-economic environment” in the southern African country.
“With the strong focus on the retailing operations, Zambeef is confident that this robust performance will continue, demonstrating the resilience of the Group’s business model,” he added.
During the half year period under review, Zambeef reached a final settlement with the Zambian Revenue Authority (ZRA) over a historical disputed tax liability. This had led to a “write-back to the Profit and Loss Account of approximately $3.5m”.
It had invested as much as $7.4m in a breeder farm and new stock feed facility, helping it eliminate “supply bottlenecks in the egg, pork, beef and chicken” divisions.
