Botswanan supermarket chain Choppies has forecast up to a 30% increase in profit for the six month period ending December 2017, driven mainly by an increase in profit in its South African operations.

It is the first time Choppies has made a profit in South Africa since opening its first store there in 2008. South Africa is a challenging economic environment, having undergone a sustained period of low growth and recession that saw consumer incomes squeezed. Choppies has struggled in South Africa in the past, particularly with losses in its stores in the mining towns of the north west.

Choppies now has 82 stores in South Africa, mostly around the northern parts of the country, and plans to open 40 more stores by mid-2018. South Africa is Choppies’ biggest store network, larger than in its home market of Botswana.

Choppies is currently expanding operations in Southern and East Africa by opening new branches in Kenya, Zambia, Tanzania, Mozambique, Zimbabwe and, most recently, in Namibia. It has yet to break even in its other international markets: in September 2017, CEO Ram Ottapathu revealed that he believed that the company’s Zambian stores would break even when the network reached 15 stores, up from its current 13.

As such, reach and growing profitability in South Africa is an important milestone for Choppies, and relieves pressure on the company during a period of ambitious expansion in which many of its new country markets have yet to reach scale. In South Africa Choppies has entered a mature supermarket sector dominated by Shoprite, Pick n Pay, Spar, Massmart and Woolworths. Its no frills, price competitive offer has resonated with the target audience of black middle class consumers.

The challenge for Choppies is scaling up and improving operational efficiencies in its growth international markets. In October 2017, the company announced it would seek to open 40 more stores outside Botswana over the coming months (South Africa (+13), Zambia (+8), Kenya (+4), Tanzania (+3), Mozambique (+3), Zimbabwe (+2), Namibia (3)). Both Zambia and Kenya are being targeted to reach break even points within the next 12 months. Tanzania, where Choppies has taken over some of Uchumi’s former store estate, provides a major challenge – Shoprite and Uchumi have both exited and Nakumatt’s store network has shrunk to a single store.