WELL DONE

Zambia 2014 | AGRICULTURE | FOCUS: ZAMBEEF

Zambeef is leading the way in the Zambian agribusiness industry by using a business model that sheds new light on how to grow a small livestock business into an African food imperium.

Zambia seems to have found its competitive strength outside the traditionally strong mining industry. Over the last few years the agribusiness has emerged as a promising industry with potential to become an export product of some size. Leading the way is Zambeef. Starting from humble beginnings in 1994 as a struggling meat factory, the company has now grown into a listed company with a wide range of products that are sold across the African continent.

At the Huntley Farm, just north of Lusaka, Zambeef oversees its business, which includes food products such as beef, chicken, pork, stock feed, eggs, dairy, oils, and wheat, but also leather and shoes through its subsidiary Zamleather. Altogether, this generated revenue of over $300 million in 2013. Fundamental to the success of Zambeef is that it owns its entire supply chain, which enables the company to control the process from farm to fork. As a result of this vertical business model, the company is able to tailor its products to the various segments of the market. A prime example of this is that Zambeef is able to reach the lower income population through its independent outlets in the outskirts of the cities and in the countryside, this in addition to the more upscale butcheries in Shoprite supermarkets for more prosperous Zambians. Being able to tap into both groups is something quite unique to an indigenous African firm.

The Zambeef model challenges the traditional investor's conviction on the African continent, which proclaims that companies should stick to their core business and partner with specialists to fulfill the other tasks. In the years of Zambeef's rise, however, companies in Zambia simply did not offer these services. This forced Zambeef into developing the chain that starts with the input for livestock and ends in the customer's shopping bag. This model significantly reduced the risk profile of the company

and ultimately became its biggest asset. Now that it has acquired a strong domestic presence, Zambeef is looking across its borders. It has already entered the large markets of Nigeria and Ghana with its vertical business model, and has started exporting to virtually all southern African states for a total of $30.3 million in 2013.

With a growing middle class in Zambia, and an estimate of 325 million comparable wallets on the African continent, the demand for Zambeef's products will surely increase. World Bank calculations indicate that Africa's overall food and beverage market will triple in size to a total value of $1 trillion by 2030 and that, more specifically, the demand for meat is expected to triple by 2050.

In order to keep up with the continuous rise in demand, Zambeef made the decision to go public in 2003, when it was listed on the Lusaka Stock Exchange. It also started trading on the London Stock Exchange's Alternative Investment Market in 2011. By successfully raising its capital twice in recent years, Zambeef was able to increase capacity by purchasing more land and was able to invest in the supply of soya-based livestock feed. This second move indicates somewhat of a shift away from the meat industry, but it is seen as an important force that will drive the company's future growth. In the long run soya oils, under the name Zamanita, are even expected to generate more revenue than beef.

Zambeef clearly sets the example in the region with its alternative business model. Like most countries in the region, Zambia faces a trade deficit when it comes to food. This can be illustrated by the fact that a country such as Thailand is already exporting more food than all of Sub-Saharan Africa combined. However, through good policy and strategy, and the example of Zambeef, Zambia might soon be able to change its cards into a winning hand. The Zambeef model could even turn out to be applicable outside the local agribusiness sector and onto companies across the Sub-Saharan African region. Illustrating the importance of a strong agricultural sector Makhtar Diop, the World Bank Vice-President for the Africa Region recently stated: “The time has come to make African agriculture and agribusiness a catalyst for ending poverty." Zambeef demonstrates that, with a keen strategy and a solid base, this can be done.