admin
Business Reporter
CAIRNS Foods is targeting a 35 percent growth in the market share of its chocolate business buoyed by improved capacity utilisation. The company’s acting chief executive officer Mr Jeremiah Kwenda told The Herald Business in an interview that the group also aims to increase capacity utilisation from the current average of 40 percent across its divisions.
The snacks division is driving the company’s performance with capacity utilisation topping plus 60 percent.
Mr Kwenda said the chipping business is facing stiff competition from imports from South Africa and called on Government to introduce policies to assist local companies.
Potatoes are cheaper in South Africa at $5 per pocket compared to Zimbabwe where they sell at about $10 per pocket.
Furthermore, the SA government gives subsidies to farmers pushing prices of produce down. Exporting companies in that country also receive incentives including a favourable exchange rate. The cost of the United States dollar, the prime currency of trade in Zimbabwe also makes local production more expensive than in South Africa.
The incentives and subsidies make SA produced goods cheaper than Zimbabwean produce.
However, Mr Kwenda says that Cairns Foods welcomes competition.
“We are not afraid of competition. Our products are good quality and our flavours are preferred locally and in the region. There is however need for policy measures to assist companies to remain competitive,” said Mr Kwenda.
He said Government introduced 25 percent duty and surcharge on imported chips but they still compete with locally made chips.
“Our cost structure is higher than them and although we compete on pricing, we will be squeezing our margins,” said Mr Kwenda.
He said Cairns Foods is engaging farmers and packaging suppliers to find common ground in a bid to lower costs.
The food and beverages manufacturer is currently undertaking preliminary work on the upgrades of the cornflakes and chocolate business lines.
“The idea is that we want to meet production efficiencies and we want to regain our market share in the chocolate business line,” said Mr Kwenda.
In Mutare, Cairns Foods is upgrading the jam and bean line machinery while the company angles to purchase a new pasta machine for Bulawayo.
Online Reporter