National Foods positive about demand for maize products

Zimbabwe Stock Exchange-listed food manufacturer and marketer, National Foods, experts demand for maize products to be firm and has put in place a substantial import programme of raw maize to meet demand, chief executive officer Michael Lashbrook told our sister publication Business Weekly.

National Foods is one of the leading maize milling companies in the country and for its 12 months to June 2019, recorded a 60 percent volume growth for the maize category.

Over the years, the maize division tends to benefit following a poor harvest.

Zimbabwe is expected to record another poor harvest for the 2019/20 season in addition to the one experienced in the 2018/19 season, which left millions of people food insecure.

According to the World Food Programme, Zimbabwe will run out of food by end of February, “coinciding with the peak of the hunger season — when needs are at their highest”.

Niels Balzer, WFP’s deputy country director in Zimbabwe said the organisation will require nearly 200 000 tonnes of food to assist the 4,1 million Zimbabweans it plans to target.

This increased demand is what National Foods plans to capitalise on, according to Mr Lashbrook.

“We expect demand to be particularly firm in the maize category and have initiated a substantial import programme of raw maize to satisfy the expected demand,” he said.

Apart from the maize offering, Mr Lashbrook said his company will continue to supply the market “in our core categories” with our basket of leading branded products.

He singled out the company’s new cereal, Pearlenta Nutri-Active, which was launched late last year, to have been well received by the market.

“We will be looking to further extend our cereal offering over the next few years,” he said.

Mr Lashbrook said the snacks and biscuits categories remain key areas of focus and potential growth.

“We will continue to add to our offering in these categories over the coming years.”

In the year to June 2019, the snacks and treats division delivered an “excellent performance”, with volume growth of 14 percent driven by the King Kurls soft snacks and Iris biscuits brands.

The group said it will continue to drive a strong innovation agenda in the snacks and treats categories and both Iris Creams and Popticorn were launched shortly after year end.

Mr Lashbrook sees all the above areas as growth opportunities, which the group will pursue in 2020.

However, declining disposable incomes and in turn aggregate demand remain the biggest threat to growth in both revenue and profits.

Despite the risks and challenges currently bedevilling the economy, Mr Lashbrook said the National Foods team “remains positive” and will continue to “strive to improve”.

National Foods has a wide portfolio of brands that dominate in both the FMCG and Stockfeeds categories in Zimbabwe. In addition, the group has a strong relationship with Gains Cash and Carry, its former subsidiary which has many depots across the country that are used to distribute products.

In short, National Foods serves the whole spectrum of the FMCG and stockfeeds market as it supplies both premium and emerging brands (ie mainstream and economy) — as such, sales are relatively inelastic.

The group, one of the companies that make up the ZSE’s Top 10 Index, is currently trading at 900 cents and has a Price Earnings ratio (PE) of 10,39. Market capitalisation is at $615,60 million.