Dairy Group is a new agri-business that combines the Dairy Farmers of South Africa’s (DFSA’s) 120 years’ experience as a market leader in the procurement of raw milk (and the raw milk supplier of premium brands such as Clover) with Coega Dairy’s low-cost efficiency and house-brand knowledge. The result is a powerhouse dairy brand with the potential to significantly strengthen the local dairy sector.
‘Fewer and fewer dairy farmers are able to go at it alone, and collective action is often the key to long-term viability,’ explains Drikus Lubbe, Dairy Group’s CEO. ‘The creation of Dairy Group means the industry as a whole has a better, clearer future growth path, which is crucial for all stakeholders.’ Local dairy businesses compete against sophisticated international players within a volatile local economy. To stay competitive, dairy brands have to achieve better efficiencies and economies of scale, with capital-intensive process technologies key to transforming high volumes into better margins and sustainable business.
DFSA and Coega Dairy’s combined infrastructure and experience rise to these challenges, creating a highly efficient, optimised value chain for members’ raw milk produce.
‘The new formation immediately positions Dairy Group as the leading Ultra High Temperature (UHT) milk supplier to consumers in South Africa,’ says Lubbe. ‘It also has the ability to expand its footprint into Africa by facilitating mergers and acquisitions in competitive dairy categories across its infrastructure network.’
Dairy Group’s ability to expand into Africa – which features 500 Drikus Lubbe, CEO of the million consumers with low exposure to South African dairy brands – newly founded Dairy Group is an important part of the logic behind its creation. Success in African markets will, in turn, strengthen the dairy value chain within South Africa. New business opportunities will be created for hard pressed South African dairy farmers, including emerging black-owned farmers, who are central to Dairy Group’s future growth plans.
‘We take a broad view of sustainability, which we see as being as much about achieving viable business growth as maintaining excellent environmental standards,’ says Lubbe. ‘In South Africa, commercial growth has to include a strong focus on black empowerment. This is especially true in the agri-sector, where we need to bring new players in to augment the strength of established entities. Consequently, nurturing new entrants is a central part of Dairy Group’s growth strategy. We’re looking forward to taking advantage of our new scale and structure to bring that vision to life.’
DFSA is the largest collector of raw milk in South Africa. The company supplied Clover’s full raw milk requirements, including its own products which are predominantly UHT under the Clover, retailer-owned brands and Ultra Milk brands. DFSA was initially a full subsidiary of Clover SA. Then it was 74% owned by DFSA’s Milk Producers. Clover finally disposed of its investment in DFSA in May 2020 to the Milk Producers Trust.