Dairy products company set to close its Zambian factory at end of March

The French-based company will, however, not be leaving Zambia, where it has had a market presence for the past 30 years. Instead, it will be importing manufactured products from South Africa and other countries within the Lactalis stable. 

Lactalis has a large manufacturing presence in South Africa, where its dairy brands include Parmalat, Melrose, Steri Stumpie, Bonnita and PureJoy. 

The announcement of the Zambian factory closure was made in a memo from Alban Damour, General Manager for Asia, Oceania and Africa at Lactalis. He said the decision was difficult, but necessary, for the company’s long-term sustainability. 

According to Trendtype, the emerging markets consultancy, Lactalis’s market share has suffered due to the Zambian government’s focus on driving up domestic milk production, which has put more value brands into the dairy market.  

Absorption of financial resources in recent years 

Lactalis also said that it “had to consider the significant and persisting absorption of financial resources over the last eight years” related to the Zambian business. 

Trendtype points out that the transition to an import-only model may not be plain sailing for Lactalis.  

“The Dairy Association of Zambia has campaigned against cheap imports of milk products that undercut domestic producers, and is lobbying the Zambian government to increase import tariffs from 5% to 25%. It also campaigns for subsidies for Zambian producers. Long term, it has also talked about cutting imported dairy products altogether,” the consultancy states. 

Dairy Business Africa magazine reports that the shutdown of the plant is set to have a profound impact, not only on the workforce but also on local milk suppliers who have long relied on the company. 

“Lactalis has pledged to offer support to those affected by the decision, but the move raises concerns about the long-term economic implications for the local dairy sector,” Dairy Business Africa comments. 

“The shift to importing products is likely to change the dynamics of the Zambian dairy market, and it remains to be seen how the local industry will adapt to these changes.”