The Sunday Mail
NEW food products — ranging from cereals and bread spreads to milk — are flourishing on supermarket shelves as several manufacturers are engaging in product diversification.
These products — potential rivals to traditional brands — now occupy bigger space on supermarket shelves, a development that has been cheered by many consumers, saying increased competition will help keep prices low and ensure better quality.
According to the Ministry of Industry and Commerce, research and innovation has seen firms developing new products that are competing with traditional brands or imports. This has also contributed to an increase in capacity utilisation in industry.
“In line with our import-substitution thrust, we now witness product diversification by our local firms through research and development,” said the ministry.
In the past few years, several local firms, particularly manufacturers of fast-moving consumer goods, including beverages, have made substantial investments in new product lines. These have become alternatives to existing brands.
While Pepsi could probably be the most notable product that has managed to gain traction over market leader Coca-Cola in recent years, potential rival products have emerged in cereals, margarine, cooking oil, rice, dairy and flour market segments.
“The visibility of rival products is becoming more pronounced and the growing competition is already biting big brands,” said Ms Patience Nyaradzo, a shop manager with a leading retail chain.
“Initially, it was the issue of price, but we can now see an element of quality appreciation as well; customers favouring emerging brands.”
According to a report from the Ministry and Industry and Commerce, many companies have invested in areas that have been traditionally dominated by a few players.
These include Mount Meru, which commissioned a US$20 million edible oil processing plant.
Blue Ribbon Foods is in the process of commissioning a US$27 million plant in Harare, and has since diversified into cereals, an area that has, for years, been dominated by Nestlé’s popular Cerevita brand.
Mutare-based Willoton and National Foods cereal brands are also proving to be popular with consumers.
Willoton, which produces the d’lite cooking oil brand, is investing US$5 million in a new margarine plant.
Zimgold’s margarine brand is also making traction in a segment previously dominated by Unilever’s Stork margarine brand and Olivine Industries’ Buttercup.
Early this year, Innscor launched its traditional beer, Nyathi, a potential rival to Delta’s Super and Chibuku brands. But it has not yet made much of a dent in Delta’s offerings.
Delta, which is the Zimbabwe beer market leader, controls 86 percent of the traditional beer market and 95 percent of lager sales. In July, it commissioned three production lines, including Chibuku, to boost output and keep market share.
“We have seen companies coming up, either expanding their capacities or introducing new products, challenging the traditional brands, which is important because it produces innovation. It’s good for competition and good for import substitution,” Industry and Commerce Minister Dr Sekai Nzenza said in an interview last week.
A few weeks ago, Delta slashed prices of its beverages by as much as 25 percent.
In an interview with The Sunday Mail Business, Retailers Association of Zimbabwe President Mr Denford Mutashu said the new products were helping to dismantle monopolies.
“The sure way of fighting price escalations is producing more than demand and dismantling monopoly on supply,” said Mr Mutashu.
“The new product lines competing with traditional brands is a welcome development for consumers. Government policy should tilt towards supporting emerging brands and products.”
The Consumer Council of Zimbabwe (CCZ) said that based on weekly price surveys to ascertain market trends, it has been observed that new products were competing with traditionally known brands in the segments of beverages, in-store brands, and several basic commodities including cooking oil and bathing soaps
CCZ chief executive Rosemary Mpofu the new products were giving consumers a wider pool to choose from thus providing competition and resulting in lower prices.
“Competition has resulted in lower prices on offer and an increase in product promotions by both producers and retailers has benefited consumers through reduced prices.
“There is, however, a need for consumers to exercise caution in order to enjoy the full value for their incomes through critical awareness when shopping in order to avoid purchasing poor quality and substandard products. Consumers should exercise their responsibility by seeking out information on products as some may have health-related complications that might end up costing them dearly.
“With the emergence of Non-Communicable Diseases, it is important for consumers to safeguard their health. We are therefore appealing to producers and retailers to adhere to food safety standards as provided for through the relevant legislation.”
Government is already working on a new National Industrial Development Policy that encourages the growth of emerging industries, including agro-processing ones.
The National Venture Capital Fund would be key in facilitating the formation and development of new industries and start-ups, particularly by youths and women.
In a previous interview, an official with one of the leading cereal makers confirmed that the “competition was not that stiff before” but the crowding of rival products was giving them a bit of a “headache”.
“We are now competing with products produced by fairly new technology and that will obviously come with a lot of efficiencies.”
People who spoke to this publication expressed satisfaction with the wider range of products, saying this will go a long way in keeping prices low, encouraging innovations and reducing exposure to cheap and substandard imports.
“With a variety of offerings, we have wider choices,” said Ms Tecla Mugura, a nurse at a private hospital in Harare.
“Barring occasional economic shocks, it is a situation that brings competition and also innovation as companies are forced to offer the best quality to stay in business.”
A Harare-based marketing executive, who declined to be named, said the main challenge for business was to consistently do market research to keep abreast with customer preferences.
“We are likely to see more rebranding for companies to remain relevant and to distinguish their products from rival ones or imitations.”