Market Diversification

21 Oct 2016

In business, diversification means branching out into other marketplaces; it is considered a safety net against downturns in a single market and a way to grow your business.

Despite a quest for market diversification, our strategy at Meatco and of the industry in general, is not to attempt to fill all markets available to us, but rather to provide different products to a variety markets, enabling Meatco to broaden the basket of products we serve.

By providing different products to different markets, Meatco can move products effortlessly between markets while at the same time realising better value for Namibian farmers. For example, Meatco managed to mitigate the full impact after the collapse of the oil-driven economies like Russia, simply by diverting products to other markets.

Foreign markets are critical to Meatco’s success. Neighbouring South Africa continues to represent an important market in terms of fore quarter manufacturing beef leaving Namibia, while the European Union and Norway remain vital customers because of the export value. It is important to note that 70% of Meatco’s earnings are in foreign currency, mainly from the EU and Norway.

In this vein, Meatco also tapped into Hong Kong as another market in 2016.

Since the beginning of the year, there has been a global economic slump and many markets were weakened by currency volatility. Seeing as this trend seems to be continuing, further diversification at this point will be limited.

In addition, the prevailing drought has affected both quantity and quality of products available to serve our markets.

Meatco is driven by the value we generate in our niche markets as opposed to relying on volumes (which are not consistent). Therefore, we don’t push for volumes and will not serve a specific market if the price is not ideal for us.

Meatco’s products are of the very highest quality even when local conditions are far from optimal and despite the challenges we face due to the changing demands of the global marketplace.

Policy interventions that will assist agribusinesses like Meatco are necessary to overcome these challenges. For example, even if it rains sufficiently during the coming rainy season, it is no guarantee that the Okahandja factory will open since available slaughter cattle will not be guaranteed by rainwater alone.