• Dairibord's sales rose 23% to 119.85 million litres while raw milk intake remained unchanged.
• National deliveries to processors increased 6.8%, reducing Dairibord's indicative share from 39.1% to 36.6%.
• Beverages now account for 67% of sales volumes as exports decline 23%.

Harare- Zimbabwe's dairy farmers delivered approximately 5.6 million additional litres of milk to processors during the first nine months of 2026, although Dairibord Holdings recorded no corresponding increase in raw milk intake as its beverage operations drove a 23% expansion in total sales volumes.

The divergence exposes a growing difference between the company's success in consumer products and its participation in the recovery of Zimbabwe's commercial dairy industry. Dairibord's indicative share of national milk deliveries to processors declined from approximately 39.1% to 36.6%, suggesting that other processors collectively absorbed the additional domestic supply.

According to the trading update released on 9 November, Dairibord sold 119.85 million litres of products during January to September 2026, representing growth of 23%, while revenue increased 26% to US$127.12 million. Raw milk intake remained unchanged at 32.1 million litres, despite improvements in national production and continued investment in the company's manufacturing capacity.

The revenue increase exceeded volume growth, implying an improvement of approximately 2.4% in average revenue per litre from the combined effects of pricing and product mix. Based on the reported cumulative figures, Dairibord generated approximately US$1.06 per litre sold, reflecting its ability to extract additional revenue alongside higher production volumes. The trading update did not disclose nine month earnings, leaving the profitability contribution of each product category unquantified.

The contrast with the wider dairy sector is substantial. According to the Ministry of Agriculture's Dairy Services Department, Zimbabwe produced 94.98 million litres of commercial raw milk between January and September 2026, increasing approximately 7% from 88.9 million litres during the corresponding period of 2025.

Milk delivered to processors increased from 82.2 million litres to 87.8 million litres, representing growth of 6.8%, while direct sales by producers rose from approximately 6.7 million litres to 7.17 million litres. National production averaged 10.55 million litres monthly, reaching a peak of 11.44 million litres in August.

Dairibord's procurement remained unchanged against this expanding supply base. Its 32.1 million litres represented approximately 36.6% of national deliveries to processors during the nine months, compared with 39.1% a year earlier. The reduction of approximately 2.5 percentage points indicates that the industry's additional milk deliveries were absorbed elsewhere in the processing market.

The calculation is based on comparing Dairibord's reported raw milk intake with the Dairy Services Department's national processor delivery figures. It establishes an indicative market share movement, rather than the precise distribution of milk among individual competitors. The available information does not identify the processors that gained additional volumes or the commercial arrangements responsible for the shift.

The longer historical comparison reinforces the stagnation. In the third quarter of 2024, Dairibord reported raw milk intake of 11.8 million litres, representing growth of 44% from the corresponding quarter of 2023. Its third quarter intake remained at 11.8 million litres in both 2025 and 2026.

Across the nine month reporting period, intake increased only marginally from 31.8 million litres in 2024 to 32.1 million litres in 2026. That represents growth of less than 1% over two years, during which national commercial milk production continued recovering.

Dairibord has acknowledged persistent raw milk supply constraints and expects improvements in collections from large commercial dairy farmers during the final quarter. At its September annual general meeting trading update, management also identified stable and competitively priced local milk supply as a priority.

The constraints are commercially significant because greater national production does not guarantee additional supply to an individual processor. Farmers respond to purchasing prices, payment arrangements, collection reliability, transport distances and access to production support. Dairibord's disclosures do not establish which of these factors explains its unchanged intake, limiting any conclusion that competing processors are winning supply through higher prices or superior collection arrangements.

The company's response to these limitations has increasingly involved expanding its non-dairy beverage operations. Beverages accounted for 67% of total sales volumes during the nine months, equivalent to approximately 80.3 million litres based on the reported portfolio share. Liquid milks contributed 23%, or approximately 27.6 million litres, while foods accounted for the remaining 10%.

The product mix has changed materially since 2024, when beverages represented 60% of sales volumes and liquid milks contributed 31%. Beverages have gained seven percentage points of volume share in two years, while liquid milk products have lost eight percentage points.

Beverage volumes increased 28% during the nine months, ahead of the group's overall growth rate of 23%. Foods expanded 26%, supported by demand for yoghurt and ice cream, while liquid milk volumes increased 10%.

Capital investment has supported the changing operating structure. Dairibord commissioned additional capacity for bottled Cascade and Pfuko Maheu, while the Chipinge Steri facility contributed to growth in long life milk products. During the first half of 2026, bottled Cascade volumes increased 68%, Pfuko Maheu grew 43% and Quench cordial recorded 82% growth.

According to management's September update, Dairibord invested US$11.2 million in capital projects during 2025 and expected approximately US$9 million in expenditure for 2026. The investment programme has concentrated on removing production bottlenecks and improving manufacturing throughput, enabling the business to accommodate stronger consumer demand.

The growing beverage portfolio reduces the degree to which total group volume expansion depends on fresh milk procurement. It also changes the company's exposure to input costs, particularly packaging materials, imported ingredients, distribution and electricity.

The margin consequences remain uncertain because Dairibord does not separately disclose profitability for beverages, liquid milks and foods. A larger beverage contribution may improve manufacturing utilisation and distribution efficiency, although its effect on group earnings depends on production costs, selling prices and the profitability of individual products.

The company's first half financial statements indicate that stronger volumes have already improved overall earnings. Revenue increased 28% to US$82.56 million, while gross profit rose 37% to US$21.69 million. Operating profit more than doubled to US$5.54 million, compared with US$2.76 million in the comparable period, while profit after tax increased 169% to US$3.25 million.

These figures translated into a gross margin of approximately 26.3%, an operating margin of 6.7% and a net profit margin of 3.9%. The improvement was supported by higher volumes and cost discipline, although financing requirements continued increasing.

Finance costs rose from US$720,000 to US$1.15 million during the first half, reflecting additional borrowings used to fund capital expenditure and working capital. Interest bearing borrowings reached US$13.83 million at June 2026 from US$11.63 million at December 2025.

The financing position increases the importance of converting new manufacturing capacity into sustainable operating cash flow. Dairibord generated US$4.38 million in cash from operating activities during the first half, compared with a marginal outflow in the corresponding period of 2025. Continued cash generation will be necessary to support investment, service borrowings and maintain adequate inventory.

Growth moderated during the third quarter. Sales volumes increased 18% to 41.58 million litres, while revenue rose 22% to US$44.65 million. Management attributed the moderation partly to an extended cold spell in July, which reduced beverage demand, and scheduled downtime on the bottled Cascade production line.

The quarterly performance demonstrates that the beverage expansion introduces its own demand and operating risks. Weather conditions, production interruptions and packaging availability can affect sales even as the company becomes less dependent on increases in raw milk intake for overall volume growth.

Export volumes also declined 23% over the nine months as Dairibord deliberately prioritised domestic demand. The reduction follows a 30% decline recorded during the first half, indicating that stronger local sales have continued absorbing production capacity.

The decision supports domestic market penetration, although it also reduces physical sales into foreign markets at a time when imported packaging and other production inputs remain exposed to international price movements. The company has indicated that rebuilding exports will become a priority as manufacturing capacity improves.

Zimbabwe's dairy industry provides a separate growth opportunity. According to the Government's 2026 livestock assessment, commercial raw milk production increased from 114.70 million litres in 2024 to 121.85 million litres in 2025. The national dairy herd expanded 7.5% to approximately 70,584 cattle, supported by investments in breeding, farm productivity and improved production conditions.

The assessment also identified approximately 33.1 million litres of household milk production from dairy cattle, bringing the broader 2025 production estimate to about 154.95 million litres. Household production should be distinguished from milk available to formal processors, since a substantial portion is consumed outside commercial processing channels.

Government is targeting production exceeding 200 million litres by 2030 under its agricultural transformation strategy. Continued expansion will depend on investment in productive dairy herds, affordable stockfeed, reliable electricity, farm financing and cold chain infrastructure.

For Dairibord, a growing national milk pool provides an opportunity to expand liquid milk and higher value dairy products alongside its beverage business. That opportunity will require stronger procurement volumes and commercially sustainable relationships with farmers.

The company's unchanged raw milk intake indicates that existing procurement arrangements have not captured additional national supply during 2026. Management's expectation of improved fourth quarter collections from large commercial farmers creates an opportunity to expand dairy throughput without relying exclusively on beverage growth.

Dairibord's commercial performance demonstrates the benefits of diversification, with stronger beverage volumes supporting revenue growth and improved first half profitability. The national dairy recovery is creating additional raw material availability, although the company's share of deliveries to processors has declined.

The stronger long term position would combine the manufacturing gains achieved through beverage investment with increased participation in Zimbabwe's expanding commercial milk market. Greater milk procurement would support its liquid milk and foods portfolios, while continued operating efficiency and disciplined financing would strengthen the returns generated by its investment programme.

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