eBusiness Weekly
Tapiwanashe Mangwiro
Listed horticultural firm, Tanganda Tea Company, a stalwart in the tea industry, has demonstrated resilience and strategic planning in its financial year ending September 30, 2023.
With a capital expenditure of $8,7 billion in the period under review, Tanganda has made substantial investments in bearer plants and property, plant and equipment, positioning itself for sustained growth.
A significant portion of Tanganda’s capital expenditure, $3,5 billion, was allocated to bearer plants.
This strategic move underscores the company’s commitment to ensuring a robust and consistent supply chain of quality tea leaves. Bearer plants represent a long-term asset and Tanganda’s substantial investment in this area signals confidence in the future demand for its products.
The remaining $5,19 billion of the capital expenditure was directed towards property, plant and equipment. Such an investment is crucial for optimising operational efficiency and maintaining the company’s competitive edge.
Tanganda’s forward-thinking approach, reflected in these expenditures, positions it well for meeting the evolving demands of the market. In terms of financial performance, Tanganda reported a revenue of $128,99 billion for the fiscal year.
The agricultural sector played a pivotal role, contributing $73,86 billion, showcasing the company’s continued commitment to sustainable and efficient farming practices. The beverage sector also made a significant impact, contributing $65,5 billion to the overall revenue.
For the agriculture division, the late onset of the rain and its relatively uneven distribution led to a decline in bulk tea production.
“The volume of 7 894 tonnes was 9 percent below 8 670 tonnes produced in the prior season. In turn, following the production trend, bulk tea exports of 6 238 tonnes were 12 percent below the previous year of 7 125 tonnes.
“The export average selling price increased slightly to US$1.44 per kg from the prior season’s average selling price of USD1.42 per kg.”
Avocado production suffered a blow due to the biennial bearing phenomenon coupled with the impact of the extensive pruning carried out on 55 hectares of mature trees to rejuvenate them.
As a result, avocado exports of 2 148 tonnes were 50 percent below the prior year of 4 321 tonnes.
“The average export price remained at US$44 cents per kg, as achieved in the prior year. Forty-four additional hectares of avocado plantation were established during the financial year, bringing the total hectarage under avocado to 541 hectares,” the company said.
Macadamia nut-in-shell exports were 1 551 tonnes compared to 621 tonnes sold in the prior year.
Tanganda said the unsold balance of 350 tonnes from the preceding year’s stocks was exported during the financial year under review.
“The impact of the shift in market preference, from nut-in-shell to kernel, was evident as the prices realised declined by 41 percent to US$1.93 from USD3.26 per kg realised in the period to September 2022. The company strategy is to invest in value addition options to mitigate primary produce price fluctuations and to diversify markets into Europe and America,” it continued.
Coffee production of 87 tonnes was 28 percent above the 68 tonnes achieved in the prior season and the current year’s crop will be sold in the ensuing financial year.
In the beverage division there was a decline in packed tea sales volumes of 6 percent from 1 994 tonnes achieved in the prior year to 1 873 tonnes sold in this financial year was mainly due to logistical global challenges in sourcing inputs.
The company said; “Plans are in place to clear unfulfilled orders, which will see volumes of our brands growing as we go into the coming year. In response to discernible consumer appetites for healthy lifestyles, the company continues supplying herbal infusions to support our customers’ expressed demand.”
Tanganda added that research is ongoing to broaden its range of products by bringing in flavoured herbal infusions.
“To hedge against local currency inflationary pressures and devaluation, the percentage of domestic sales made in United States Dollars, has been pushed up to 70 percent from less than 2 percent in the previous year,” the statement continued.
This diversified value chain revenue stream highlights Tanganda’s ability to navigate through different market segments effectively.
One notable aspect of the company is resilience in its proactive stance on climate change.
In its outlook, the company said; “The predicted El Nino is not expected to significantly impact avocado and macadamia yields as the company is invested in dams, reservoirs, and high-technology precision irrigation to mitigate the impact of a drought. Yields of avocado and macadamia are expected to increase with enhanced maturity profiling of plantations over the next three to five years.”
In the face of potential challenges posed by El Nino, the company has taken measures to secure its supply chain by investing in dams and other climate-proof methods.
Such a strategic decision not only mitigates risks associated with climate variability but also positions Tanganda as a responsible corporate citizen, aligning its operations with sustainable practices.
Tanganda’s ability to weather potential climate challenges is a testament to its commitment to long-term sustainability. In an era where environmental responsibility is paramount, the company’s investment in climate-proof methods aligns with global trends and sets a standard for others in the industry.
“The demand for our products remains relatively strong despite the impact of complex macro-economic factors on the local and regional markets. The growth strategy is to diversify the regional market further.
“The confidence from our customers and their support, including the value addition projects in the pipeline for our plantation crops, will increase profitability mainly as management focuses on efficiency in managing costs,” the company said.
