Zambeef: A rare meat success in Africa A fast-growing food firm is looking beyondits home country for customers

THE patrons of Manda Hill, a shopping centre in a posh part of Lusaka, Zambia’s capital, like their beef and chicken extra lean and in big portions.
The meat on sale at the mall’s branch of Shoprite, a South African supermarket chain, comes in trays with up to a dozen cuts. Meat is delivered three times a week. Cutting, trimming, seasoning and packing is done to strict guidelines in a glass-walled room behind the display cabinets. The visible butchers are like a badge of freshness for prosperous Lusakans, who shop here in droves. The store is said to be the busiest in the whole Shoprite empire.

The butchery is run by Zambeef, a fast-growing food company based in Lusaka. It operates meat at all 20 Shoprite stores across Zambia as well as in the chain’s newer outlets in Ghana and Nigeria. Zambeef’s eggs, milk and yogurt drinks are stocked by Shoprite and other local supermarkets. Zambeef has around 100 shops of its own, making it one of the biggest chains in the continent outside South Africa. It is thus well placed to serve a burgeoning class of consumer between the well-heeled shoppers of Manda Hill and the
majority that just scrape by.

Beyond South Africa there are few big indigenous firms that serve the continent’s middle class, which the African Development Bank reckons has swollen to more than 325m. Yet as their numbers keep increasing, demand for meat and other luxury foods will surely grow, because Africa has much scope to catch up with the rest of the world (see chart). Nigeria has Dangote Flour and UAC Foods. But most of the country’s big
consumer firms are rich-world offshoots.

Zambeef is also unusual in that it reaches down to lower-income groups. Its outlet in Mtendere, a short drive from Manda Hill, sells fattier meat in smaller portions as well as beef liver and chicken’s feet. The store’s tiled floor and hair-netted staff stand out in Mtendere’s ragged street market. It turns over a tidy $30,000 a week.

The hub of the business is 50km (30 miles) north of Lusaka at Huntley Farm in Chisamba. Its boss, Francis Grogan, came from Ireland in 1991 to manage a struggling meat factory just as Kenneth Kaunda, who had ruled for a generation, was ousted in Zambia’s first multiparty elections. State-owned firms were leaking cash but the economy was close to its nadir. Mr Grogan was soon joined by Carl Irwin, returning to his native
Zambia from London to run his family’s firm. The pair turned it around and in 1994 founded Zambeef, with a staff of 60. It now employs 5,000.

An early expansion into retailing proved a shrewd move. Shoppers paid cash for beef but cattle could be bought on credit. In 1995 Shoprite took over eight stores from the Zambian state and asked Zambeef to run the meat counters. It was a big break for the fledgling firm. “We clicked with Shoprite,” says Mr Grogan. To keep growing, Zambeef has gone back up the production chain. It acquired Huntley Farm in 1996 for its abattoir, roughly halfway between Lusaka and the copper belt. It has since bought farmland nearby to supply grain for feed. Cattle are fattened here for 60-90 days before slaughter.

A shortage of cattle is a long-standing problem, which in part is why the firm started producing chicken. Mr Grogan will send lorries to Tanzania or Namibia to top up the supply. The quality is variable. Meat from the well-fed cattle at Huntley Farm provides steaks for Shoprite and for the fancy hotels springing up all over Lusaka. Lower grades go to Zambeef’s own stores. “Our retail chain gives us the markets for all of the animal,” says Mr Grogan. The head, hooves and organs are sold. Offal is also imported from richer countries
where there is little taste for it.

Zambeef is listed in Lusaka and London and has twice raised capital in recent years to boost capacity. The purchase of a 45,000-hectare (111,000-acre) soya farm and a crushing plant secured the supply of feed needed to produce more chickens. Zambeef’s Novatek brand of soya-based chicken feed is the market leader in Zambia just three years after its launch. Its sales were 15% of Zambeef’s revenues of $255m last
year. Zambeef now sells soya cooking oil under the Zamanita brand. It will soon generate more
revenue than beef.

The firm’s farm-to-fork model is at odds with the investment-analyst dogma that says companies should stick to a core business and hive off other tasks to specialists. But Zambia’s economy is not so developed that there are firms which could be relied on to supply all that is needed to keep Zambeef’s stores fully stocked. The company has its own fleet of 78 refrigerated lorries. “There are no cold-chain logistics in Zambia,” says Mr Grogan, “We had to develop it ourselves.”

Not that Zambeef is averse to working with others. It recently formed a joint venture with Rainbow Chicken, a South African producer. It already exports animal feed to Zimbabwe and is looking at other markets. Its operations in Nigeria are still small: it has five Shoprite counters as well as four of its own stores. But Shoprite has plans for 20-30 stores.

The downside for Zambeef is the demands on its managers. “We had to send three or four of our top guys to Nigeria,” says Mr Grogan. But the potential in a market of 167m people is great. “We couldn’t ignore it,” he says.

Source: http://www.economist.com/news/business/21579012-fast-growing-food-firm-looking-beyond-its-home-country-customers-rare-meat-success