Hippo Valley Estates Limited (Hippo) says revenue remained firm in the quarter to June 2023 despite volumes being weighed down by competition from duty-free imports towards the end of June.
The Zimbabwe Stock Exchange (ZSE) listed company said in a trading update for the period under review that although volumes were negatively impacted by the cheaper imports, revenue in both foreign and domestic currency remained strong.
Last, producers claimed they lost roughly 5 percent of the domestic market share to imports considered grossly cheaper than local brands because they enjoy subsidies from their countries of origin.
Sugar is also currently imported duty-free after the Government scrapped the duty to improve availability when prices of most goods in Zimbabwe shot beyond the reach of many as the local currency depreciated.
“Revenue realisation on the local market, in both local and foreign currency, remained firm as most customers continued to support local brands for the better part of the first quarter although volume decline was evident in the last weeks of June 2023 as the impact of duty-free sugar imports set in.
“Various measures are being implemented to defend market share in the domestic market,” said Hippo Valley.
The company said the late finalisation of sugarcane supply contractual agreements with private farmers resulted in delayed deliveries and an overall decline in the total output for the quarter by 10,6 percent to 57 427 tonnes compared to the prior year.
“Total sugar produced for the quarter amounted to 57 427 tons, trailing prior year by 10,6 percent due to delayed deliveries by farmers on account of late finalisation of sugarcane supply contractual agreements with private farmers.
“The annual off-crop maintenance programme was successfully completed before the 2023/24 season, which resulted in plant start-up as scheduled
in the first quarter. The low cane throughput in the first five weeks of the milling season negatively impacted milling time efficiencies.
However, Hippo said cane quality and cane-to-sugar ratio were both above target to date resulting in improved recovery efficiencies during the quarter under review.
The sugar processor also highlighted that the forecast industry sugar production of 414 773 tons compared to 396 682 tons in the 2022/2023 season was below industry’s capacity.
“Total industry sugar production for the 2023/24 season is forecast at 414 773 tons (2022/23: 396 682 tons), still well below the nameplate industry capacity of 600 000 tons.
“The industry is implementing both vertical (yield and quality improvements) and horizontal strategies (new developments) to improve capacity utilisation in the medium to long term,” said Hippo Valley.
The impact of imported sugar on domestic producers comes as Buy Zimbabwe (Buy Zim) raised alarm over seven cheap unfortified sugar brands being imported for sale in local retail shops in contravention of the law.
In a statement released earlier in July, Buy Zimbabwe said some of the non-compliant brands included: Ashna Golden Sugar, Sunshine Brown Sugar, Selati White Sugar, Splendid Brown Sugar, Flair Brown Sugar, Selati Sprinkle Joy Brown Sugar and Evergold Brown Sugar.
“As Buy Zimbabwe, we are urging the relevant authorities to take necessary action against the importation of these unfortified sugar brands as they fall short of the nutritional benefits,” said Buy Zim.
Moving forward Hippo Valley said, “Current marketing initiatives remain focused on growing optimizing returns from both local and premium export sales”.
“Whilst the local market remains pivotal for the industry, management prioritises efficient fulfillment of commitments to existing regional and premium international markets as well as development of new markets, necessary for the generation of additional foreign currency to sustain the industry’s requirements for critical imports.”