By AYO ALONGE
MANAGING Director of FrieslandCampina WAMCO Nigeria PLC, Mr Rahul Colaco speaks about activities of his company and how the firm has thrived, specifically reaching out to rural areas with the sole purpose of improving on nutrition, in the midst of a litany of economic challenges. While asserting that the dairy industry in Nigeria is gradually growing, Colaco wants Nigerians to drink more milk for their nutritional health. He also fielded other questions bothering on dairy foods production in the country, business challenges and more. Excerpts:
How has the domestic environment affected your company?
Firstly, fiscal and monetary policies impact our organisation and others in the area of foreign exchange. We are working closely with our banking partners to ensure we have a sufficient line-up of funds for our requirements and to ensure we provide nutrition to our consumers. One good thing is that we are consumer friendly. With the payment of salaries, we hope that the backlog of salaries would be addressed. It goes back, at the end of the day, to making sure that Nigerians see a value in dairy consumption.
Manufacturers have identified power as a major challenge doing business in Nigeria. As a company, how does poor energy supply affect your business?
We are all affected by the erratic power supply and we have devised an alternative source of power supply. We work mainly on gas and it is also more efficient. We are fortunate to have a good relationship with gas producers and it helps us to be more efficient. We have an efficient model and that is alternate use of gas.
Are you looking at any way of taking advantage of the current crisis in the country, with reference to cattle management in Nigeria, since that is a means of sourcing for your raw materials?
This is, of course, an unfortunate issue. It is a combination of complex factors to be addressed. We have already proven that we have a good business model. If you look at Oyo, we have several farms in the state. We also work with more settled Fulani herdsmen and we have very responsible people. We can’t do it alone. We need the support of the government and the public sector. We are more than happy to expand this model to every part of the country. We are always looking at other business models on how to professionalise dairy supply.
What is your capacity utilisation and in your estimation, what is the percentage of raw materials sourced locally?
In terms of capacity, that is difficult to answer but we have a high capacity utilisation and we are looking at expanding our capacity and that is why we proposed investing N4 billion yearly. In terms of locally sourced materials, we source 30 percent locally and we are working very hard to increase that percentage in the coming months, through the Dairy Development Programme (DDP).
Can you say why locally sourced materials are not up to 80 percent yet?
The challenges is first that building a local diary chain takes years. I come from a country where it took over 30 years to have the country sufficient in dairy production and that is India. It take years of action, leadership, rigour, discipline. You cannot take holiday from a dairy farm because it is a 24/7 job. There are very few examples in the world, if any, where large scale dairy farming is successful. Dairy farming is not like setting up a big cement or sugar factory. You can’t go and bring in 10,000 cows into a farm and start estimating the litres of milk they would produce. Dairy family only works on a small scale. You can have a disease that would infest the cows and your 10,000 cows are gone. Dairy farming tends to be more efficient on a small scale basis. The advantage is that it is more impactful and it employs more people. At some point, you can even get into automation. In Netherlands, it is usually about 100 cows. In dairy exporting countries, the industries have been built over decades. The attention here has been there but the burning desire hasn’t been there but today, it is on and we are happy to be bringing in experts, especially from South East Asia. However, it is not going to be a one-year solution, it is going to take a period of years and the message here is that we are committed to these programmes and committed to continue to help the government.
What is the reflection of your 61-year sojourn on the objectives of the company and to what do you owe the growth of your premium brand, Peak Milk?
Well, we don’t believe we are old yet; we believe we are 60 years young and there is still a room for better growth. We also believe that Nigerians should drink milk more often. We think we still have a long way to go and that is why we believe we still have to in new innovation, new activation and new ways of engaging the consumers. We try to do this through our “Mama Oyoyo” campaign and other campaigns. In terms of whom we owe this, it is our customers who have helped the brand grow up and our employees that have always worked so hard to ensure that the best dairy product in Nigeria is Peak. Many other business partners have also helped us to this level that we are today.
How have you been able to manage growth, within the past 61 years?
Growth is a key part of our business model. It is a combination of two to three things: Bringing the best of dairy products to Nigerians through reaching out to different channels. We also work with healthcare professionals in bringing a scientific framework into the process of nutrition, especially to schools. We also try to engage many to ensure that our products gets to every part of the country. There are still some parts of the country that do not have access to our products. We want to invest directly, especially in the rural areas, with the low pack of N20 and N50. I think we have always focused on quality and Peak stands for being one of the best quality propositions, all over the country. Our Three Crown also serves the same value with Peak.
What has been your experience or challenges in business?
One of the challenges is that consuming dairies is not embedded in the culture of Nigerians, unlike we have in Europe, where we have the average consumption of 150 litres yearly. In Nigeria, we have less than 10 litres annually but we believe that the challenge is more of consumption challenge and we want to get through to get deeper and institutionalise that into the dairy lifestyle of Nigerians. That is the thrust of our campaign. It is about understanding the customers’ perspective. Thee other big challenge is the value of dairy raw materials.
Your company is in over 18 countries. How have you fared in comparison to other countries where it exists?
Countries’ performances vary according to global and local economic situations. On the overall, the last year in review was a good year for us here. It was more challenging and the low milk supply caused that. Nigeria was affected because of the slow dairy market, but now, we have a good bottom line performance.
Do you think you are in stiff competition with others?
Absolutely! There are both international and local players but the competition is good. I believe in the free market philosophy. We need more companies in the dairy industries and that would bring in more dairy propositions and with the 180 million Nigerians, there is room for the market to thrive in dairies.
Is there anything that you do that you wish you can improve on, or say one thing that you wish to copy from your competitors?
I think, for us, we look at competition across the entire food and beverage market. We look at all the players and what they are doing in terms of production, packaging and pricing and we try to benchmark ourselves in operations and marketing. We look at the wider competition and try to stay afloat the rest within the food and beverage industry.
As a company that has plied its trade in the country for the past 61 years now, what is your assessment of the company’s improvement on quality and customers’ satisfaction?
We have always paraded ourselves as believing in quality, especially in Peak as our major brand. We can’t rely on our past achievement. We have to keep the moment, with regards to quality. One of the changes we have made on quality is that we are investing more resources to see that it serves the consumer right when necessary. It means we need to put in more resources from the factory gate to the consumers to make sure we sustain quality. We have better technology and data that help us to control this. That has resulted into quality improvement, over the years. That was how we received the FSSC certificate that only a handful of food and beverage companies in Nigeria have. Another is that we don’t compromise on products, with our highly quality product which has 28 vitamins and minerals. We believe in offering not just quality but value to the consumers. We spend a lot of time in research and development, alongside our parent company in Netherlands.
The Minister of Agriculture and Rural Development, Audu Ogbeh, recently said that Nigeria loses over N1.3 billion on importation of dairy foods. What is your reaction to this.
From my perspective, I would say Nigeria uses and spends over N1.3billion on foreign exchange and I think that is fact. Nigerian imports a lot of products, not just dairy. Nigeria does not have a local dairy industry. We believe that dairy is good, especially for children. The point is for us to begin to look at how we can localise dairy productions as much as possible. I think that Nigeria is blessed with a great potential of people, resources and land. There is an unorganised cattle industry and the challenge is now to professionalise it and bring world class practices and this is how we can make the difference. Soon, as a company, you get to see how we hope to take this to the next level.
Your turnover decreased by over 4 per cent last year. What do you foresee in the coming years?
I cannot give you any specific forecast on number because we don’t do that. It is hard to make predictions because there are lots of volatile issues in the economy and consumers are even changing their lifestyles. We believe it would be a challenging year but we will continue to invest in our brands and consumers to ensure we maintain our leading position.
In your 2016 outlook, you did say that if the right fiscal and monetary policy is put in place, the country’s GDP is expected to shoot up. What are these fiscal and monetary policies?
I think, firstly, that is from the chairman and he probably knows better than me because he is a banker. It’s not a magic policy because it is workable. The budget of the country has good programmes and plans and it is about the implementation and execution because there are very capable people in government. I’m confident that this would be the right direction to go. I am hopeful that the economic issues the country faces right now would be resolved in coming months and that would make the country flourish.