*Whoever solves big gap in movement of ice cream to end user is going to win
*Gap in the logistics area needs filling by some logistics companies
Who would have thought the size of the Nigerian ice cream market was worth as much as N10 billion? And this is with a lot of untapped opportunities for growth. Tunde Ogunrinde, Managing Director and Chief Executive Officer of Just Food Limited, a company founded in Nigeria by Peter Mason, now semi-retired, but which has grown to become West Africa’s leading provider of consumables and global food equipment brands, says the market is worth that much and that it is growing. In this interview with PHILLIP ISAKPA and BUKOLA ODUFADE, he talks about the structure of the food equipment and ice cream business in Nigeria, the challenges it is facing and how Just Food Limited is making its own contributions to the development of manpower, the food and hospitality industry and the economy. Read transcript of the interview below. PHOTO CREDIT: ISAAC JAYEOLA
As a major player in the hospitality and food industry, what are the major issues that you have to deal with?
I think it is not common to us alone. I think as a nation, we are quite import dependent; so what has happened in the last six months is that port congestion has made things difficult. It means delivering to our clients has been quite tough. In trying to meet our normal, very good timeline, that hasn’t helped. Foreign exchange has been a little bit more stable, we can plan with a little bit more certainty; it will be great at half the price, but that is not something that will happen overnight. At the top of my mind, the single biggest challenge is Customs, delays at the port. But when you take that away, the challenge that has always been in the industry, perpetually, not just for us, is two things – human capital and logistics. It has always been and it is how do we battle or change that as a country, human capital and logistics, just moving things from one place to the other.
Human capital is just the quality of employees that you get coming through. So what employers tend to do, and we spend a lot of time, rightly so, is developing their people internally. I know a lot of companies shy away but we are big on that. If you don’t develop them, they don’t perform and if you develop them, yes, they may go, but which is easier? You might as well take the chance, develop them, and hope that you create an enabling environment for them to stay and at least pay you back or feel the need to stay with you a bit longer because nobody will stay forever in any company. That is what the universities and everybody else should be doing, so that at entry point, the cost of developing an individual should be reduced, so our operating cost will be better, which means we are not charging more. But if the tertiary education and state of education is a mess, somebody has to pick that up because we have to run a business. You will find businesses have become training institutions, and I am not saying they shouldn’t, but you are starting at a level that is very low, when you start to train people in your business in letter writing skills, good communication, this should all be things you should have learnt coming in to the business.
A big part of your business is after sales services, and you say that this is done by well-trained technicians. From what you have mentioned, that must be a big hindrance; so do you train them locally?
We do 3 things. Firstly, we are in partnership with a technical college, which does some training for our electrical/electronics, because we have a lot of electrical/electronic based equipment; and by the way, equipment are only 15 percent of our business. Our business is mainly ice cream and everything that has to do with ice cream, but there are equipment that accompany it. In terms of real revenue generation, equipment is a pre-causal; it just supports our main business. So we partner with a college, we do internal training, regular for our teams across the markets that we operate, and that is not just in Nigeria. So, sometimes they come here from Ivory Coast, Ghana, Senegal, and wherever else we do business, or we go across. Most importantly, when we sign a partnership agreement with equipment companies or anybody, it is a very rigorous process; firstly, we go and see if they are capable, that they have not just come to sell us equipment.
Are they mostly European companies?
Well, European, American, Italian companies, we deal with a lot of companies on the equipment side. So, one, are you capable? Do you have an R&D? Do you train people? We go and see them, and if we are happy, they must come and see us here to know who they are dealing with before we sign. It is a standard practice, once we are both happy, we get into bed together and dictate the number and frequency of visits that these people must come and see us and perform technical training and, of course, certify our staff.
As I said, it is a combination of those three things, local partnership with a school, technical college, so we do interns, for example, technical interns and youth service and post-youth service, we put them on internship, we pick the best, we put them through our training school, that’s on the technical side. And of course, these people come in to do training. This year, in the last few weeks, we sent someone to Scotsman, which is an ice company in Dubai, we are sending someone to Taylor, which is our biggest equipment volume in October, to the US. So, we do a combination of things and that is what you have to do to top people up.
On the issue of equipment, the fact that most of your pieces of equipment come from abroad, how do you fit them in Nigerian dishes because most of the people you supply are Nigerian hotels, even if they are international, they still do local dishes?
You will be amazed, actually. Let me split the business, just to understand the nature of our business. Equipment make up only 15 percent, the biggest is ice cream and ice cream related products. But since you asked about equipment, we have five pieces of equipment – ice cream equipment, ice cream is ice cream, local or international; ice machine, ice is ice, you don’t have to adapt it, whether local or international, so when you need ice, there is nothing else to do; ice cream display fridges and freezers, nothing to adapt. I guess the only piece of equipment that requires adaptation that people use is an item called “Rational”. We represent Rational currently, and what we have done with that is, we have customised and worked with partners to make sure we create local dishes with these equipment. That’s what we have simply done. We have a chef locally, who has worked with the partners internationally and has developed a range of meals to customise that particular product locally for us, so that is what we have done. Everything else, except from Rationale, there is nothing to customize; that’s not to say that with our ice cream side of the business, with the powder, we haven’t created things like zobo ice cream, or we haven’t created things like mango, local coconut. Yes, we do all that but on the equipment side, there is little you can customise, it is just how you use the equipment to create local dishes. Hence, we have a training kitchen, we have people constantly developing products to use the equipment to create local product. So, zobo ice cream, mango ice cream, coconut ice cream, local fruits, we infuse them into the ice cream.
Your company also encourages new entrepreneurs to go into the ice cream business and the restaurant business, how do you help them avoid certain difficulties in the industry, especially for ice cream, because I think it is a very challenging industry?
Not just ice cream, the hospitality industry is challenging, the failure rate is always high. I guess the competitive advantage we have is not just in myself, but the rest of my team, most of us have background in the food space. I was chief operating officer of Chicken Republic for four to five years before, I worked in Burger King in the UK for 18 years; a lot of my staff have either worked in Burger King, Chicken Republic, all over the world; our chef was from Dubai originally. So, there is a lot of combined experiences we have in the food space. When people want to set up, we provide another service through our subsidiary company called QSR Consult. What that does is, it is the consulting arm of our business, so when people come in, it is like a supermarket approach, we can help find sites, help you with equipment, help you develop a recipe because we have the kitchen for you to do your trials, we can help you do your branding, we can help you like we say, “concept to reality”. But when you go to super market you don’t buy everything, you only pick what you want from it, you say “no no, I just want equipment” or “I just want to buy ice cream powder from you”; that’s discriminatory. So long as there is a transaction, cash-wise, we are happy, but we are bespoke in that way, we are flexible in that way, maybe that has helped us.
On the equipment side, the biggest thing we have is that after care. People buy equipment from us in confidence knowing that for example, if you sign up to the premium insurance preventive maintenance plan, if your equipment breaks down, we are ready to give you one to substitute, that is if can’t fix on site so that you don’t suffer; that’s the advantage, because having worked in a kitchen myself, I know what it means to have an equipment break down. I empathise with the customers, that’s a unique thing that we do, nobody does it. So, we have equipment that we hold for customers; that is money tied down. We could sell it, but when your ice cream machine breaks down, and by the way, the target for the engineers is that they must do it ‘first time fix 95 percent of the time’, we are not in the business of sending the technician out, they don’t fix on site, it cost us money to withdraw the equipment here and then give you one, it doesn’t work. The idea is you fix the equipment 95 percent of the time when you go out into the field, but if you can’t, it happens, we will give you equipment. Of course, you must be on our preventative maintenance plan, but if you are not, you will have down time on your equipment.
The small businesses that want to come on, how do you help them with finance, as some might not be able to afford your services completely, what kind of plan do you set up for them?
I am going to be brutally honest; we are not a financing company. What we do is send them to the banks, some people also come to us as a consulting company and say “I want to invest in businesses”, we just put people together because we are in the business of just helping people, but we are not a bank, we don’t give loans or have the capacity to do that, but we will point you in the right direction, we will send you to people who may want to invest in your business, venture capitalist, individuals, high networking individuals who we know, some who have the money but not the ideas, so we just put them together and we get our benefit because we support them both.
Your clients are mostly the big names in the hotel and food business, and needs are always changing, so how do you adapt, are you quick to adapt?
Simple and easy, the answer is yes and I can give you two things for that. First thing, interestingly enough, 60 percent of our clients are actually who you call single operators, some will refer to them as mamas and papas. So, interestingly, it is not the big boys that drive this business, it is that little woman in the corner, she just has one small ice cream machine, buys just one carton, we have a lot of them; so it is not really the big boys. This business was founded by Peter Mason who really pioneered the whole ice cream business in Nigeria and he started off by working with those individuals, some of them have been with us for 20 years, one shop, one machine. What this does is it allows us to react quicker because decision making for them doesn’t require a board and because we cover the whole of Nigeria and some other West African countries, we are everywhere, and we have a representative in every major market. We have a new warehouse in Asaba of 4,000 square metres, we put it in the East to get closer to our customers because, one of our biggest customer base is actually from the East. We are building another 4,000 square metres in Kaduna before the end of this year, just to get closer to the guys in the north, and of course, we are in Lagos and we are in Otta in Ogun state. Another advantage for us is that we are a small company, where we are not listed; we don’t need anybody to tell us to make decisions, all the share holders are here so we make decisions quickly. From the point of decision making for ourselves as a small company, we can respond quickly.
I think most importantly, skilling your team to be able to make decision without coming back to you. We don’t micro-manage, so we have business heads that are being trained constantly to be able to make decisions. For example, we say training is big, putting on my senior management team and then direct report, so the people that report to me and their number twos, through a programme called Link Sigma, fantastic for process development and engineering; by the time they go through that, they don’t need me to make some decisions, they enhance processes themselves and they react. We allow people to be themselves so that they can make decisions faster.
Is the ice cream business in Nigeria increasing, are more people coming into the industry?
We are thankful it is increasing. But it is, people are becoming more [involved]; I think some of the new entrants that have come into the market have helped because they are visible, they are bold, so everyone wants to be involved. You know, we are very entrepreneurial, they see some of this brands doing quite well so they come to us and say, “I want to be like that when I grow up”. We will help because we have always been here. So, yes, more people are coming in, not just the ice cream business, a lot of foreign brands too and it is actually good, because it is allowing people to aspire to want to own that and it is allowing small people to setup what they can with an advantage, sometimes, of local taste and preference. Some of these guys coming in, if they don’t adapt, they will struggle. So, the ice cream business is getting more exciting and we are also going to be doing some more in the ice cream business, maybe directly to the customers, just to support and grow the business. Yes, it is increasing and it is exciting.
What’s the size of the Nigerian ice cream market because it cuts across a wide area in terms of customer base?
It would be a wild estimate. I will estimate about N8 billion to N10 billion per annum in terms of total flow in sales that is happening in the ice cream industry. But I think most importantly, there is a lot of underserved areas; the north, for various reasons. But trust me, I mentioned I used to run a business before coming here, our biggest sale of ice cream was in the north, it is hotter, more demand but not in a lot of places, so the people that sell ice cream there are cleaning out, they are absolutely cleaning out. So, yes, the market is huge, the potential is there and we will continue to mine it as best as we can.
In terms of how it is structured and setup, how will you describe it and how can it be better for the purpose of capturing an economic activity that has a place in the economy?
Let me segment it. Ice cream is sold in three or four formats. One, modern trade – so all your supermarkets, frozen packs, all sorts of ice cream, I won’t go into the technical side of it, but all the different types of ice cream. Then we have the restaurants and everybody else, a restaurant in the sense of chain quick service restaurants who sell another type of ice cream; and the single operators that I spoke about earlier, they don’t have a chain, just a single machine, they either sell it in a cone or a scoop.
Generally, that is how ice cream is sold but then, we have the pushcarts that people also use. The biggest challenge of ice cream is logistics, you can’t leave it out too long, so whoever gets better at preservation or getting it closer to their customers is who is going to win. Look at the quick service restaurants (QSRs), the type of machines they buy from us that they use, remains frozen. It is at point of pull that you dispense. But if you want to take it out, they put it in a cup, but you’d have paid; so it is up to you how you then preserve it, so, people finish it and go. Then you have your supermarket. They freeze it, you go to them, you buy and take it home, the distance between yourself and home is another thing. But I think there is a gap there in the logistics area and some logistics companies have to look at that, because even some of the producers who produce from one end of the market and move it across the country, what you end up getting is that the final quality each time the temperature is broken has an impact on sales, because if I have bought it and the quality is not brilliant, I am not going to get a repeat purchase. So, that is why I am saying there is still a big gap and whoever solves that movement of ice cream to the end user, or last mile like people say, is the person who is going to win.
So, as a business, we are trying to get closer to our customers using that format, but also encouraging the people in the logistics chain. I have spoken to some logistic company and they are looking to invest in the cold chain, to just help them and support them. It is not just for ice cream; generally, cold chain is a mess in the country, we don’t pay too much attention, which is why we are trying to support with our ice business because we have ice that you can use to move products and will last you 24 hours. So, we are mindful of the big gap in logistics and we are positioned to support, but there are other partners that must come into that space and help people move goods, even for the farms, for poultry, for meat, to move it safely so that it moves from what is called the danger zone and it remains preserved in quality when it gets to the end user.
The other thing is your ice business, I am sure that there will be many who would not know that there is a business around ice making. Talk us through the market as it is setup presently in the country and what role Just Food is playing in this area.
We are not new to ice, but we have played really in the equipment side alone, where what we have done is we have pretty much just supplied equipment to people and also maintained their equipment. Even at that, we then noticed that the demand is so much that what we have started to do is to produce the ice ourselves and we are now looking for people who will distribute, while also distributing ourselves. It still goes back to that cold chain, because you still need the cold chain to be able to move the ice, but the type of ice we produce is what differentiates us, we have a type of ice that can last you under some decent holding conditions for 24 hours. And there are different types of ice people – you have your caterers, who use it for parties with big drums and they put all the drinks in, that is called scale ice and it is really not drink ice, it is for the outer holding of the ice; you know Nigerians, we have our champagne, our beer and drinks sitting on the ice, you don’t put it in. We have other types of drink ice, but we have decided to stay with a particular type of ice, hopefully, we should have in the market in the next few weeks. That type of ice has got very little amount of water in terms of the technology, so the melt factor is slower, that is also considering the environment that we are in. So, we have tried to play in the ice market that has very little water so it can last longer, ice block is the other type, which is very common, if you put ice block here, it will melt almost immediately, but ours will hold a little longer. That’s how we are differentiating our ice and that is what we have brought to the market, it is new and we are building capacity right now. If you go outside, you will see some of our trucks, we have the team all ready and we are in our final stages of launching the product; we have even started selling particularly the scale ice, but the other type of ice including the lower water, that should be in the market before the end of September.
What are the types of customers, must it be high end or low-end?
No, all sorts, we have caterers, we have street hawkers, so long as they know where to get the ice and it is going to last them longer whilst they are hawking on the street, they will buy from you. We have aggregators, people who sell drinks and have a big ice bin, so when they come to buy 60 crates of drinks from them, you can also sell ice to them; and then, we have people that do event, these are the event centres; then we have people who make ice, because to make ice block, it takes them 48 hours for the ice to freeze, with the machines we have, this ice is produced in like 10 minutes, so it means that we can now supply them already frozen ice, since they have a cold room, they just put in and resell. So for us, these are the guys we are supporting and since we have access to the machines, it makes it easier for us to work through that, and if people want to buy the machines themselves, yes there is CAPEX involved, but we are happy to sell.
I know you support the food industry, not just in terms of the equipment but also in terms of your interest in Nigerian and African foods. How is that going, because you mentioned local flavours of ice cream?
It’s still going well, nothing has changed. When I say that, I mean it is still something we want to do, I think our food is very good, as a nation. But presentation can be an issue sometimes, so when we are working with the brands we work with, we are constantly working with their chefs, to force them to develop local products. Let me give you an example, we sell a whipping cream called Milan Gold, so with Milan gold, we have been able to infuse it into egusi, to enhance the flavour.
We’ve been able to infuse it in pepper soup, so we have created local dishes. But how are we spreading the gospel? We do this when their chefs come in and work with our chef, we invite people who are already buying this product and give them the recipe free of charge. The benefit for us is that they buy more Milan Gold, but this is how subtly we are spreading the gospel.
And that is just on one product. For the ice cream, whether it is zobo or agbalumo, all these flavours, we are working on them and sharing them for free. And what it means once local products are put to better use, then you can order more, especially the consumables. And because we are working with international chefs, it is our mandate, they must work with our local products, not just enhancing the flavours but sometimes in presentation as well. You go to Nigerian restaurants abroad, and you love the food but the presentation just isn’t right. So we are championing that, most importantly, we would revisit this issue of a magazine, we still want to do that magazine, a culinary magazine in the industry and to try and showcase what we are saying. So we don’t share it to just our customers, but with everybody.
What you find is that, although product tastes are different, but what does Ghana, Ivory Coast, Guinea, Cameroun, Liberia have in common, these are markets we play in and they have some things in common, that are similar and you can adapt locally for them, using the same ingredients.
Staying with the word presentation, I know Just Food has always been strong on the issue of presentation. Talk us through the issue of presentation of local foods because I think the idea is to internationalise, the Chinese probably has issue of presentation at one time, the Indians too, the Thais had the same problem, but they are all internationalised now. For Africa, for West Africa, for Nigeria, where you do business, this issue of presentation revolves around internationalization of our dishes, so other people can sample the richness of what we have. How is it hindering Nigerian or West African foods?
I think presentation comes in different ways, so from the image of the restaurant itself. There are different images of restaurants, and there are different places people aspire to eat. But if you want to approach an international market, yes there are guys who don’t care and would eat anywhere, but that is a small group of people. They have heard of jollof rice but they go to your place and it is a mess, in as much as they love jollof rice, they won’t take that risk except if they have lived in Nigeria before. So, for a lot of our partners who are starting to go across West Africa, our image has got to be right even to attract people in your business first, it has to look international, it has to look acceptable, even if it has an African taste. Of course, Nandos is South African, Chicken Republic is Nigerian, and has crossed to Ghana, so it is international, even though it is still in West Africa.
Then the food itself, it is not about diluting what you are doing, but you could have various types, so again I’ll use Nandos as an example. You go in and there is perri perri, very hot and then there is one that is mild, widening their appeal to the international market. So I think when those things are done, it helps to bring in more people, but honestly when I see these restaurants, the image isn’t right, and people don’t even want to step in. The menu can also be adapted in a certain way, you can adjust portion size, and I know I have seen lot of Instagram pages, presenting different dishes, like eba and all that. The actual presentation can make it look attractive. There is a new restaurant in London called Ikoyi, it is very high end, in Piccadilly. They do jollof, and a lot of Nigerian dishes, they are attracting a lot more people. I would be very happy if the likes of Chicken Republic could be sitting not just in West Africa, but in Europe. Nigerians are everywhere, and they would bring their friends in. If there is one or two brands who have the appetite to do that, it is doable, image needs to be right, ambiance, you might have to tweak the variety of foods you provide, but the African food is on the rise.
There was a Jollof Week in the U.K. a few weeks ago; I was walking through Birmingham, and saw a whole panel of recipe for jollof rice, but we are not capitalising on it. I mean cash is an issue, but there are aspects; and again I guess presentation has a lot of formats, not just the food, you have to attract people in and look good first.
Let’s look at the business in terms of your spread across West Africa, you started out in Nigeria and you have been around for a long time, you moved on to Ghana.
Yes, so we are in Ghana, then to Cote d’Ivoire, Senegal, and we have now registered in Cameroon, in Guinea and we are going to register in Liberia and Sierra Leone.
Now, I want to ask about your experiences playing in these markets. What are the challenges, market by market, and also together, because they are West Africa, and are ECOWAS countries?
To be honest, the challenge is not huge, the reason we are there is to just spread and structure our business in such a way. I guess our five years plan is to be in every ECOWAS country plus Cameroon, and we have started with the sea routes. If you noticed the countries I first mentioned, they are on the sea, to allow importation to be easier. There are no big challenges, but the only challenge is the fact that there is an ECOWAS treaty where you can move goods in Nigeria from other ECOWAS countries, where you have paid duty charges but, guess what, you still get charged again. If I want to move equipment from here to Ghana, I pay twice; and it is the same HS code. So that is the only challenge; and, of course, the size of those other markets are smaller, so you have to be careful about what you put in the market, that what we think works here might not over there. We have obviously learnt our lesson, that what might work here might not work over there; even though we are similar people, we are very different. So, our approach has been more flexible and in each of those markets, we have a local manager, an indigene of the country, which eases the transitioning, so the markets have been good to us, but we are new in all the markets except Ghana, less than three years. It takes about five years to fully establish. Ghana is fully established, we have a strong presence there, we have physical structures in Ghana, Senegal and Cote d’Ivoire; the other markets are fairly new, we have done transactions but no physical presence there. Apart from the issue of moving goods around, and paying double charges which makes the pricing higher in those countries, there are no major issues; they are warm people.
Again, back to training, my staff has a French lesson, every Wednesday, so the language is not a barrier, I speak a little French myself, so I can get by, so no major issue apart from moving goods around.
Nigeria is a big market and the economy has been yo-yoing for some time. How has it impacted on the economic climate of doing your kind of business and what do you foresee going forward?
Historically you talk about the speed to reacting; and we made some very important strategy, maybe some business strategy that I can’t really divulge, to help us survive through tough two years; it has kept us fairly safe. We tightened some things, we made some decisions upfront in terms of our suppliers, we reduced some of our stockholding in terms of our partnerships; very strategic decisions that helped us in that tough period.
What I see going forward is the fact that this market is going to keep growing, the only risk, and we say it every time elections are close, is the political climate. Nigerians are very resilient; we also find that in businesses, the private sector, if only the government could just do more. There are a lot of talented people here, who can create jobs and make lives better; so for me, the opportunities are there, for me we haven’t even started yet. If infrastructure is better, I said logistics is an issue. If people can move their goods by rail, rather than by roads, I can move frozen products better. What do I see? I’m still very hopeful; I think things would continue to grow, so far the political climate allows that. The instability in foreign exchange that happened a few years ago was a very tough period for us as a business. Like I said, we took the right decision on time that helped us get through that. But I’m optimistic, we would always adapt to what the society throws at us but I’m hopeful that things should get better in the next few years.
I know there would be policies, the agriculture policies of the government seem to be very bullish and this is an area that would have a bearing on what you do. Is there a keying into that and how is that helping to shape some things you do at JUSTFOODS?
Well, not directly, the interface we have is with maybe the diary industry, and the diary industry in Nigeria unfortunately is still at an infant stage. We don’t have enough cattle to produce beef let alone milk, so we have a far way away. We have talked to local farmers and they tried to partner, but if you ask most Nigerians if they would have milk or meat, they go with meat. When you then say milk, ice cream is even a derivative of that. So we are in touch with the diary industry, we partner with them when we can, but the honest truth is that the diary industry is so far behind that the government really needs to pay attention. There is a lot to be done to bring them up to speed. There are some great guys that we work with in the Kano region, that we do some great stuff with, but what we do is that they do more of the milk they produce with yoghurt, but even the total volume is low. I mean you look at our partner in Ireland, they produce 1.2 billion litres of milk annually and I honestly don’t know what we would produce, but I know it is not 1.2 billion litres. If it was, our butter industry would be better. Let me segue around agriculture. We have a lot of waste especially in some of the flavours, in orange, pineapple, we are looking at that. We are looking at that as a business, at how we partner with local farmers and international partners to see how we can start to reduce that and use it to create things we can use locally. So that is currently how far we have gone on that, if those things are in place to support the farmers, it makes it cheaper and we can source locally.
What do you think could be a game changer because you seem to have emphasized diary being very low in terms of production in Nigeria, is there a one word, or phrase or sentence game changer?
I have to be careful with this because thoughts of mine and the business might be different, but I would say this tactfully and if people can read in between the lines, I think we need to change our technique of raising our animals. It needs to be different, what we are doing is not sustainable; you are never going to feed with beef and milk the way we do it now. So, whether people want to call it ranching or whatever, what we are doing now needs to change, whatever it becomes is another different matter. I’m not an agricultural specialist, even agriculture colleges need to be supported, and there just needs to be something different done about cattle. The cattle are not well-fed; they are never going to produce great milk and also the breeding, so we are far away. It needs to be a deliberate intervention by government, to say this is where we want to get to, and to make that happen, if not, it would be start and stop. There needs to be specific goals, I don’t know, one million metric tonnes of milk, and I heard the 9 percent interest rate being given to farmers, but are they getting it and what is the process of getting the loan? It is a government decision; for the private sector, it is too expensive.
Your partners, Rational being one, how much of an inroad are you making to pull them in, not just having them make equipment in America and Europe and bring them here, but putting their feet on the ground here?
Our biggest partner is Lakeland Diaries, and we would be 30 years in partnership with Lakeland Diaries next year, and honestly the partnership is as strong as it has ever been. They come here five to six times because we demand it. And that is not just Lakeland, but all our partners; the worst case, they come twice a year. And that is to have a pulse on the market, to train staff, so we are not distributors, distributors just buy and sell. So they come here and see what we do with their equipment and products, they are closer to us and pay attention to what we say. So with Lakeland, we are developing a product to be released into the market soon, where the products would support the ice cream industry and give people better quality and value than maybe some of the imported products you get. So, they are very close to us, and upscale our teams, invite us and our staff across. And it is our dream that with time, we can co-jointly establish warehouses, we are in talks with them without saying much. There is nothing wrong, like you said, with them putting feet on the ground, with us together as co-partners, because the West African market is huge and Nigeria is the biggest. So, that is definitely doable and possibly would happen very soon.
In terms of the market size and competition, what is everybody chasing, what is the size of what you all are chasing?
The ice cream market, like I said is around N8 billion to N10 billion. To be honest, I have read different reports but it is more skewed towards yoghurt market; there is no good quantitative data, it is being extrapolated by looking at what other people do, so there are lots of players in the market, both in the frozen category and the soft sale, and in the mix side of business, there are about five to six players, who bring mix into the market and sell. You can bring mix in, but it is hard to copy people, in terms of your staff, it is what you give your staff that helps them stay ahead of others, trainings and exposures, so it is not always about pay. That is maybe how we have differentiated ourselves.
So everybody is chasing that N8 billion to N10 billion market on the ice cream side and the equipment side is slightly different; and that is a more fragmented market because people can just bring in their equipment. Again our competitive advantage is that you can bring equipment in but when it breaks down, what do you do, so that is also something we have done differently.
Also, we know hotels are a big market for you, for equipment, how much of the challenges hotels are facing affect your business?
Yes, it does. But the thing about hotels and equipment is not whether they are facing challenges or not. Of course they are, but they have already bought the equipment, so equipment would last for ten years; they are important and a big part of our business but usually it is with the after sales service that we continue to see them. But when the number of hotel openings slows down, then that is when we are affected. I believe a few hotels have been postponing their opening dates, but what they also do is that if they are international hotels, some of the sourcing is done from where ever they are coming from, by their parent company, so what we do is to tag along; and once we have sold to them, it is the after sales service and sometimes, that is why they buy from us because they can get the same quality of products here with after sales support.
How do you manage to survive in a nation where power supply is erratic and this might affect your business because you make ice and your customers might be unable to purchase the amount they would like?
God gives us the serenity to accept things we can’t control, we can’t control that but we can support it. That is why the type of ice we are going for is the one with very little water so the melt factor is slower, and on our equipment side of things, the compressor on our Taylor machines has a five year warranty in a country where power goes on and off and the compressor is what goes first, because we talk to our partners. This is Nigeria, there are some things you need to tweak in the machines to make them last longer, so power generation and all that, it is just how to work around them, we can’t control them. Then in terms of ice cream melting and all that, yes, we can provide you with ice to help you move the ice cream, we have trucks that we use ourselves to move across cities, locating our production for ice creams rather than one central location. So that is how we work around it.
How does the peak and off peak periods affect the business?
You just plan for it. This is when all the staff is on holiday and it is the rainy season. So you just plan for it and offset with other things and get more creative, it probably doesn’t rain as much in the north than in the South, so you focus more in the north, so far you know and you are not caught unaware.
Banking December 26, 2019