AN UPLIFT in volumes has been projected for Zimbabwean consumer companies despite rising cost structures, a volatile policy and monetary environment as well as higher taxation, say analysts at IH Securities.
Hippo Valley, Tongaat Hulett’s Zimbabwe-listed unit, reported a 44 percent downturn in revenues to US$191,59 million this month although the gross profit for the year to end March rose two percent to US$66,87m.
Another Zimbabwean consumer company, Star Africa Corporation that also trades in sugar, however, raised revenues by 22 percent over the same period.
Nonetheless, analysts at IH Securities said in the securities and advisory firm’s latest research note on Zimbabwe’s consumer sector that they “anticipate an uplift to volumes for consumer-facing companies this year owing to a likely recovery” in consumer spending.
However, this was against the backdrop of “general cost structures continuing to be on the rise” corresponding to a “volatile policy environment and the crystallisation of costs” in United States dollars.
“On the demand side, private consumption growth, which had slowed down from 4,8 percent in 2023 to 2,5 percent in 2024, is expected to have a rosier year with household spending rebounding by 6,6 percent in 2025,” said the report.
After an improved rainy season and prices for minerals such as gold firming up, Zimbabwean consumer firms are well placed for stronger consumer spending. Companies expected to benefit from this include beer and soft drinks manufacturer, Delta Corporation, which has cited stiffer competition in some beverage categories.
Zimbabwean consumer discretionary spend, however, remains subdued, with data from Zimstats recently showing average earnings of 55 percent of the employed population at less than US$100. Worse still, “job losses within the past three months emanated mainly from those engaged in agriculture and domestic activities, whilst IT and Electricity sectors had the lowest job” losses.
Moreover, Zimbabwean companies have to absorb some of the legislation-linked costs of production, such as sugar taxes and fast-food taxes, to support volumes. IH Securities is thus skewed towards consumer-facing stocks that exhibit the ability to generate a significant portion of revenue in US dollars, have good management practices, and are also consistent in paying dividends. Companies offering defensive staples such as National Foods — in which Tiger Brands has an interest — were displaying volume growth, said the analysts.
“National Foods’ maize division recorded a significant volume growth of 58 percent in May over the comparative nine-month period, largely attributable to the market dynamics. Dairy company, Dairibord, saw consolidated volume growth of 14 percent for its first quarter ended 31 March 2025. “On the retail front, the past two years have been challenging for formal operators on account of several issues.
“As per leading retailers, a key impediment to viability has been S.I 81A of 2024, an exchange control act that mandated the selling of goods and services at the official exchange rate,” noted the report. — IOL
