Entrepreneurship Zone: 01 December 2021 :: Zambian food processor overcomes packaging issues to maintain sales in domestic market

Wed Dec 1 08:31:16 CAT 2021

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Entrepreneurship Zone: 01 December 2021 :: Zambian food processor overcomes packaging issues to maintain sales in domestic market

 <http://www.zitf.co.zw/> 

One of the main problems for food processors in Zambia is the lack of packaging solutions. For companies targeting supermarkets, there is a low availability of higher-grade packaging that meet the strict requirements of formal retailers.

“This is one thing that we have been battling for a number of years since we started the company in 2014,” says Rodney Miselo, CEO and co-founder of the Ronipam Group, a diversified company that has subsidiaries in agro-processing and commodity trading. “And it’s not just us, it affects all food processors here.”

According to the CEO, there are only a few packaging companies that are available to local producers in Zambia. Despite being approved by Zambian regulators, these companies produce packaging that does not meet the requirements of large supermarkets like Shoprite, a South African retail giant.

With no other solutions on offer, local companies are effectively shut out from high-end superstores that provide easy access to Zambia’s middle to higher-income earners.

“If you are going to sell to the local guy they won’t know the difference but it limits your access to affluent customers because they shop in Shoprite and if your product cannot get into Shoprite then you are out.”

As it stands, supermarkets in Zambia mostly sell imported goods that meet packaging standards from Zimbabwe, Kenya and predominantly South Africa.

Finding packaging solutions

Miselo gives the example of peanut butter that reacts with local packaging to create an oil which means the finished product leaks when placed on supermarket shelves. The agro-processing arm of the company, APM Farms, produces a variety of products including mango chutney, peanut butter and orange marmalade.

It buys fresh produce from 1,800 smallholder farmers in Zambia’s eastern region and then processes the fruit and vegetables in a factory in the capital city of Lusaka. To maintain sales despite the lack of packaging solutions, APM Farms has pivoted to selling its goods in bulk to wholesalers that repackage and resell its products.

A selection of products produced by APM Farms, Ronipam Group’s food processing arm.

The company used to buy packing in bulk from China – one possible solution to a domestic market deficit – but the supply chains have since been disrupted by Covid-19.

“Before we packaged them in 400g and 1kg containers but we have since moved to bulk supply where we package 200kg drums to different wholesale suppliers,” says Miselo.

The CEO adds the company will start manufacturing its own packaging for supermarkets next year to permanently find a solution to the problem. In the meantime, it will focus on bulk sales and also to smaller convenience stores.

Miselo believes the current packaging situation in Zambia is a cartel business where a collusion between authorities and companies has crowded other packaging companies – which could meet the demand from local producers – out the market. He says that he once travelled to Kenya to meet with a company that were going to set up a packaging company in Zambia but the proposal eventually came to nothing.

Strategies for success

Rather than focusing on aggressive growth, Miselo says that the current strategy is honing the business model in the local market. “We are not looking at moving from producing 200 tonnes to 10,000 tonnes and getting it all wrong. Dealing with food needs to be handled carefully, so of course we have plans to scale but the immediate focus is just getting everything right,” he says.

APM Farms is currently producing around 2,100 tonnes of peanut butter, 100 tonnes of orange marmalade and 100 tonnes of mango chutney each year. A key strategy to make it in the domestic market is to “leverage partnerships”, Miselo says.

Ronipam Group’s processing facility.

The high cost associated with logistics and unreliable infrastructure makes distribution a challenge in Zambia. “We basically partner with other people that might have goods that are going in the same location, so for things like transportation it is better to team up,” the CEO says.

In 2019, the company also diversified and moved into commodity trading. Ronipam Agro-Commodities was created to trade produce such as soya beans and maize and Ronipam Petroleum was created to trade oil.

The benefit of a diversified business model is that funds can flow seamlessly between the two arms of the business according to whichever may need a liquidity boost. Currently, Ronipam Group is made up of 33 employees – agro-processing accounts for 80% of the business and commodity trading accounts for the remaining 20%.

However, Miselo says that he is winding down the petroleum trading. “It is an area that requires full attention and at this point we have decided that the agro space is our main area of focus,” he says.

A key push in the future will be the export of goods to Canada, after a deal was signed with a Toronto-based company, One World Nation Ventures, that is looking to import non-GMO food products.-Howwemadeitinafrica

Rodney Miselo, CEO and co-founder of the Ronipam Group

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