Varun Beverages expands local milk procurement in Zambia

ZAMBIA – Varun Beverages Zambia has announced plans to increase its procurement of raw milk from local dairy farmers, stepping in to fill the supply gap created by Parmalat Zambia’s exit from local processing. 

The move comes as the country continues to recover from a prolonged drought in 2024 that saw milk production decline by up to 45%.

Parmalat Zambia, owned by the French multinational Lactalis Group, shut down its manufacturing plant on March 30, 2025. 

Effective April 1, L&A Logistics will import its dairy products from South Africa and distribute them in Zambia. This shift has sparked concern over job losses and disruptions to the domestic dairy supply chain in an already challenging economic context.

Price pressures and climate impact prompt exit

The Dairy Association of Zambia attributes Parmalat’s departure partly to price competition and inconsistent milk supply. 

In recent years, many dairy farmers have shifted to other processors offering more competitive prices. 

The situation was compounded by climatic volatility; 2024 drought conditions led to a 45% reduction in milk production, particularly in southern Zambia, where farmers rely heavily on grazing systems.

Despite the challenges, Lusaka remained relatively stable during the drought. This localized resilience has made the capital region a focal point for Varun Beverages’ initial milk sourcing efforts.

Cream Bell line to use local milk

Varun Beverages, a bottling partner for PepsiCo, will use the locally sourced milk in its Cream Bell brand, which includes flavored milks, milkshakes, yogurt drinks, and ice cream. 

The company is currently partnering with farmers in Lusaka, with plans to expand sourcing to other provinces as conditions improve.

“We are working to expand our collection network and increase the volume of milk we can purchase from farmers,” said Clive Hanakamba, Milk Procurement Manager at Varun Beverages Zambia. 

“With one of the major off-takers leaving the market, it has left a void that has to be filled by other processors.”

Hanakamba added that Varun Beverages aims to become the off-taker of choice by building trust and offering platforms for continuous farmer engagement.

Snack division also grows footprint

In parallel with its dairy initiatives, Varun Beverages is expanding its snack division in Zambia. In partnership with PepsiCo, the company is producing and distributing the Simba Munchiez brand from its factories in Zimbabwe and Zambia. 

A new manufacturing facility under construction in Zambia is scheduled to open by April 2026. Once operational, the plant will have an annual production capacity of 5,000 metric tonnes.

This move is aligned with trends among food and beverage processors who are increasing local production capacity to reduce reliance on imports and mitigate supply chain risks.

Supporting the dairy sector post-drought

Reflecting on recent climatic challenges, Hanakamba noted that Lusaka’s resilience during the 2024 drought highlighted the need for investment in infrastructure and planning across all dairy regions.

“Lusaka was a bit more resilient, but that’s the kind of resilience we need to build everywhere,” he said. 

“The drought severely affected milk collection, but with this year’s good rains, we’re hopeful that the industry will rebound.”

Varun Beverages is exploring long-term strategies such as cold chain improvements and potential farmer support programs to strengthen milk supply reliability.