Operational excellence is the foundation of both the quality promise and the margin structure. PurePastures runs a hub-and-spoke model: a centralised, progressively automated processing facility in Gauteng feeds a cold-chain distribution network, with phase-2 packaging and distribution nodes planned for Cape Town and Durban to reduce delivery distances and extend reach.

7.1 Supply chain

• Sourcing: Contracted pasture-aligned farms plus owned production, secured under multi-year agreements to stabilise volume, quality and, partially, price.
• Processing: Centralised Gauteng hub handling pasteurisation, homogenisation and value-added manufacture; automation upgrades lift throughput and yield.
• Distribution: Hybrid owned-fleet and third-party cold chain, with AI-enabled route optimisation to cut fuel, spoilage and delivery time.

7.2 Production facilities

The Gauteng primary processing plant is the operational core. Phase-2 secondary packaging and distribution nodes in Cape Town and Durban, funded within this raise, shorten the cold chain to the two other major metros, improving freshness, lowering logistics cost and enabling faster export dispatch through the ports of Cape Town and Durban.

Dairy’s fast inventory turnover and disciplined receivables management produce a lean cash-conversion cycle of approximately 28 days, limiting the working-capital drag as volumes scale, a meaningful advantage over slower-turning food categories.

7.3 Quality assurance & traceability

• HACCP-certified production systems across all lines.
• ISO 22000 food-safety management compliance.
• Farm-to-shelf digital traceability, providing provenance data that underpins the premium and export propositions.

7.4 Automation & efficiency

The R70m growth-capex programme is anchored by factory automation (R40m), cold-chain logistics (R20m) and solar energy (R10m). Automation raises yield and lowers unit conversion cost; cold-chain investment improves reliability and reduces spoilage; solar self-generation reduces exposure to electricity-tariff volatility and load-shedding. Together these lift EBITDA margin structurally rather than cyclically.

7.5 Capacity & utilisation

The plan models FY2026 output at approximately 72% of installed processing capacity, leaving headroom to absorb volume growth through FY2027 before the phase-2 nodes add distributed capacity. Automation lifts effective throughput on existing lines, so a meaningful portion of the revenue growth to FY2030 is served without proportionate new plant, a key driver of operating leverage. Break-even sits well below the operating level (Section 13.7), giving the plant substantial resilience to demand shocks.

7.6 Procurement & input security

Milk procurement is governed by multi-year contracts with a diversified base of pasture-aligned commercial farms, supplemented by owned production. Diversification across farms and regions limits single-supplier and localised-disease risk; owned production provides a controllable quality benchmark and partial price insulation. Feed-cost exposure, the dominant driver of farm-gate milk prices, is monitored actively, with premium pricing and contract structures designed to pass through a reasonable share of sustained input-cost movements. Where pass-through is incomplete, the value-added and export mix provides an offsetting margin cushion.