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At Illovo we believe there is a significant opportunity for growth as we increase our domestic and regional sales. Accordingly we aim to make our branded sugar pre-packs accessible and affordable for all consumers, in both urban and deep rural markets.
To achieve this aim, we had to better understand the needs of consumers, particularly those in our core target markets where purchasing decisions are largely influenced by limited daily income. Research has taught us much about the role sugar plays in our consumers’ lives and the purchasing dilemmas that they face, dilemmas linked to pack sizes, affordability and the market failure to date to satisfy their requirements with a quality branded offering. To unlock this opportunity, we also had to understand the economic and social drivers
influencing local grocers including the availability of wholesale sugar nearby, the impact of cash flow on purchasing decisions, and how often and how much sugar they could and would buy and stock.
Armed with these insights, we quickly established that we could improve our service by improving the proximity of our distributors to these grocers. We also needed to focus on affordability and on providing consumers with the option of buying quality packs of branded sugar at different price points. The opportunity was clear, but we were not set up as a business to meet this demand.
We needed to increase our pre-pack packing capability. Not only did we need to be able to pack a greater variety of pre-packs, we also needed flexibility to respond quickly to changing market dynamics. This led to us developing a blueprint design for Illovo packing stations with just this set of capabilities, enabling us to expand our product range efficiently and cost-effectively to much smaller pack sizes.
Historically, our mills have packed our sugar in high volume packs, predominantly 1kg, 500kg and 1 tonne. Furthermore, packing was limited to the sugar campaign season which runs from March to September. Bulk packing is cost-effective but there is little flexibility and we knew we needed a stand-alone packing facility that could work all year round with the flexibility to pack in a variety of smaller sizes.
We opened our first stand-alone packing facility, Olivewood, in Malawi in May 2022. Here they pack sugar produced by our two Malawian mills, Nchalo and Dwangwa, from bulk 1 tonne packs into consumer-friendly pack sizes, ranging from single serve options from 50g up to 500g. The addition of this facility has significantly increased our packing capability, addressed growing consumer demand, and significantly increased awareness of our brand with domestic consumers. We now have the flexibility and agility to adapt to changing consumer needs in an efficient and cost-effective way while continuing to deliver quality branded sugar in affordable pack sizes.
Having tested our approach in Malawi, we are now using our learnings from Olivewood to construct additional packing plants in other consumer facing markets, enabling us to build our brand there too.
In Tanzania we are building a dedicated packing facility as part of our mill expansion plans at our Kilombero plant. This facility will enable us to efficiently process the increased sugar production from the new plant in a cost-effective manner. In Rwanda, we are investing in a packing facility to introduce branded, fortified, pre-packed sugar to that market and the sugar will come from our mills in Zambia and Malawi.
We believe there is a big opportunity. Building our in-house packing capability will enable us to shorten supply chains, better serve domestic consumers and provide consumers in these regions with access to Illovo-branded, trusted, affordable, pre-packaged, quality sugar.