NATIONAL Foods Holdings Limited (NatFoods) is now directly doing business with informal traders in a bid to tap into their forex reserves.
Last month, NatFoods revealed plans to reinvest US$10 million of its earnings this year, into ongoing operations to solidify its market position amid the El Niño-induced drought.
This was after the firm spent US$40 million as capex over the past three years upscaling and growing its operations.
Most of this investment is self-funded, hence the plan for the company to increase its presence in the informal market where over US$2 billion is believed to be circulating.
“So, it’s not really currency related, that strategy. It’s more related to getting our product onto the market. So these new products we have are a bit different to, for example, selling our old products, mealie-meal, flour and rice. You know, here, we have to get to the end consumer and that’s the logic for doing it, trying to reach the end consumer,” NatFoods chief executive officer (CEO) Mike Lashbrook said in an interview with NewsDay Business.
“Products like mealie-meal, you can’t really justify, you know, taking it that far. Typically, we will sell through a wholesaler. So yeah, that’s where our real logic is. It’s not currency driven. It’s more driven by the will to reach the end consumer and make sure our products are out there.”
In terms of how much revenues they want to come from the informal sector, the NatFoods CEO said they had no target.
“I don’t think any target per se, we think more about how the market consists of a number of sectors and we look to serve all of them. We want our products to be in all sectors. At certain times, certain sectors may be doing better than others for one reason or another, but our aim is to serve all the sectors,” Lashbrook said.
“So, you know, for consumers looking for our new breakfast cereal or our new pasta, they should be able to find it everywhere at a fair price. That’s our objective. And simply, that’s our objective to have our product in front of the consumer when they buy. That’s all.”
Last month, the firm revealed that its new pasta plant, which produces two metric tonnes (MT) per hour of pasta, came online in January following an investment of US$5,6 million.
NatFoods also invested US$7,7 million in biscuit line, which will produce the same quantities as the pasta line.
Its breakfast/cereal plant had a capex of US$4 million owing to a state-of-the-art Swiss Extrusion Plant capable of producing a range of products in that niche.
A 2022 study by the Reserve Bank of Zimbabwe found that the informal sector is estimated to generate US$14,2 billion per year.
