- Schweppes is seeking to invest US$28 million in a citrus project
- This signifies a shift in strategy, moving from reliance on external suppliers to producing its own citrus
- The project could have a major impact on the local agricultural industry, the future of Mazoe Orange Crush, and Schweppes' overall financial success
Harare- In a bold move to secure the future of its flagship Mazoe Orange Crush, Schweppes Zimbabwe is embarking on a US$25-28 million citrus project, aiming to take control of its orange supply chain and fuel expansion into Botswana.
The company, which relies heavily on farmers for its fruit supply said it secured 4,000 hectares of land from the government two years ago and plans to begin production on 700 hectares for two to three years.
Schweppes reported to have been experiencing fluctuations in supply and quality from farmers, leading to concerns about the long-term sustainability of its iconic Mazoe brand.
Mazoe is the backbone of its beverages business, accounting for 60-70% of revenue.
Due to this volatility in the supply chain, the project represents a strategic move towards vertical integration, ensuring a consistent and reliable supply of oranges.
The project, however, is not a quick fix. Raising the estimated US$25-28 million will take several years according to the company, hence, the full-scale impact of the project will be expected to be realized over a long period.
At its peak, the project is estimated to generate US$31.5 million worth of exports, further solidifying Schweppes Zimbabwe's position as a regional leader in the beverage industry.
Implications for Local Industry, Consumers, and Suppliers
Local Industry: The project has the potential to boost the local agricultural sector, creating new employment opportunities and stimulating economic activity. However, it could also create competition for existing citrus farmers, potentially impacting their market share but lowering prices.
Consumers: The project could lead to more consistent quality and supply of Mazoe Orange Crush, potentially benefiting consumers. However, the initial investment could result in higher production costs, potentially leading to price increases in the short term.
Current Suppliers: The project could pose a challenge to current suppliers, who may see their market share shrink as Schweppes takes control of its own supply chain. However, the project could also create opportunities for collaboration and knowledge sharing, benefiting the broader agricultural sector.
Schweppes Finances: The significant investment will undoubtedly strain Schweppes' finances in the short term. However, the long-term benefits, including a stable supply chain, potential cost savings, and increased exports, could significantly improve the company's financial position.
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