Online Reporter
Nelson Gahadza
Senior Business Reporter
LEADING stockbroking firm, IH Securities (IH), says Zimbabwe’s consumer landscape in 2025 looks stronger, as the country emerges from setbacks caused by El Niño-induced drought conditions.
El Niño’s impact on Zimbabwe’s economy was significant.
The drought reduced agricultural output, a key anchor of Zimbabwe’s economy, increased food insecurity and amplified economic hardship.
The drought conditions, characterised by high temperatures and below-average rainfall, severely impacted crop yields, livestock and water resources, causing a slowdown in economic growth.
In its latest Zimbabwe Consumer Sector Report, IH said that whilst the operating environment had remained challenging, there was generally an upward trajectory in volumes for consumer-facing companies.
“This underscores stronger-than-expected aggregate demand, signalling a resilient informal economy.
‘‘Consumer volumes have remained stable despite the shrinking of the formal sector,” IH said.
It added that the contribution of the largely US dollar-denominated informal sector could also be observed from the dollarisation of sales, with companies such as Delta, Simbisa and Dairibord sustaining a proportion of US dollar sales above 70 percent.
“Another factor that we have seen prop volumes is the widespread investments into capacity over the last two years, enhancing scale and enabling a better offering to the public with improved efficiency,” reads part of the report.
According to IH, supporting the consumer landscape includes tobacco sales, of which over 300 million kg of tobacco have so far been sold, bringing over US$1 billion as the tobacco marketing season rolls on.
On the minerals front, Padenga has reported an effective US$2 860/oz in the first quarter of this year, up 41 percent year on year, and the price boom in gold could also translate to higher earnings for the dominant artisanal miners.
“We also believe that consumer demand in the year will be further buoyed by strengthening remittances, which grew 22 percent in 2024 to US$2,2 billion.
‘‘We believe that all these factors tie up to a recovery in aggregate demand in 2025,” IH said.
According to IH, in line with the volume’s growth trend, revenues have trended up, with most consumer stocks returning to 2016 baseline levels and, in some cases, exceeding these levels on the back of capacity upgrades.
“On a margin basis, however, general cost structures continue to be on the rise, corresponding to a volatile policy environment and the crystallisation of costs in USD.
“Companies have had to notably absorb some of the legislation-linked costs of production, such as the sugar taxes and fast-food taxes, to support volume objectives,” it said.
The stockbroking firm said the outlook for the consumer landscape was also more positive on anticipated recovery in the agricultural sector.
“This climate will be favourable to producers in the consumer discretionary category.”
Companies operating in the consumer space have, in the past three cycles, invested in capacity and efficiencies to better position themselves to service the market.
Delta has spent US$100 million to alleviate supply-side constraints, whilst Innscor has sunk over US$157 million towards capacity building, product extensions and the introduction of new categories.
Dairibord also has a pipeline of US$24 million in capital expenditure.
IH said the consumer universe was skewed towards consumer-facing stocks that exhibited characteristics such as monopolistic tendencies, with a dominant market share, high cash-generative capacity, the ability to generate a significant portion of revenue in US dollars, good management practices, and consistent dividend payouts.
