Ohorongo Cement says it's no market bully


Updated Fri, 13 May 2011 00:00:00 GMT

Recent consumer complaints about current prices of cement in the market have irked current local cement market leader, Ohorongo Cement, which says contrary to the complaints, the average cement price has gone down a notch since the opening of its cement plant at Otavi.

Consumer grievances have surfaced about the price of cement, with cries of little price differentiation between competing cement brands. Complaints are of the retail prices, and specifically from further inland where prices have shot up in recent weeks.

There are three other cement brands in the Namibian market in addition to AfriSam and Ohorongo Cement. These are Conch brand imported from China, the French brand Lafarge, and another brand by a small Namibian cement importing company, Karibib Cement.

Ohorongo Cement, which started off on the wrong foot with market objections and negative perceptions, now says the article made it appear as if it is abusing its market position. The company is also upset that the story paints it as monopolistic, a perception that it is working hard to shake off.

Managing Director, Hans-Wilhelm Schütte, was at pains to point out "besides several price increases and increases in associated costs of logistics, Ohorongo Cement prices remain the cheapest in the market".

Not only does the company say it has the best average price compared to the four competing companies in the market, all of whom import cement from outside, Ohorongo Cement also maintains that it has "a very transparent pricing" for retailers.

The company hints that its 'best price' should have enabled retailers to offer best possible final prices to consumers.

It is without doubt that the opening of the country's own cement plant induced the market with expectations of lower retail cement prices for consumers, while the retail sector expected it to do away with uncompetitive retail and distribution practices in the market.

Things did not start on a good note for Ohorongo Cement, however, and although the company did eliminate most of the problems, negative perceptions still linger.

The company now says it no longer knows how to address perceptions in the market.

The closure of the AfriSam office in the country compounded matters, chiefly because the two companies had initially proposed to merge. The Namibian Competition Commission rejected the merger. When AfriSam closed its offices later, speculation was rife in the market.

This besides explanations from AfriSam South Africa that the closure of its office was because "it makes economic sense to service customers out of the Johannesburg office and to quote prices that include transport costs".

AfriSam says it conducted a comprehensive commercial review of the Namibian market potential when Ohorongo Cement went operational and the economic reality was that AfriSam could not afford the fixed costs of a local presence in the country.

Likewise, Ohorongo Cement maintains it has a strict policy of being the cheapest above its competitors, hence joining forces with competition is out.