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|Bread Business In Nigeria; Demystifying The Bakery Industry Myth. by ONNYX: 2:20pm On Aug 31, 2018
Bread is a major staple on the menu of many families all around the world. The same is applicable to Nigeria. Several metric tons of wheat are processed into white flour on a daily basis and this is turn provides the basic raw material for bakeries that are churning out loaves of bread in the millions across the length and breadth of Nigeria.
From morning till night you can see several bread stands littering our major cities and even villages. Large bakeries bestrode the industry like a colossus, the medium sized bakeries are thriving and small bakeries are also doing their business.
|Re: Bread Business In Nigeria; Demystifying The Bakery Industry Myth. by ONNYX: 2:22pm On Aug 31, 2018
Recently, I was a at a small business/investment round table organized by a company for their 2018 retirees of and something of interest came up. One of the resource persons came up with an advice that I considered rather inappropriate and lacking in depth. He advised that the new retirees must not invest in any business that already has so many people involved already as they would not be able to cope. He then zeroed in on the bread and bottled water industry and emphasized that these industries must never be considered by new entrants.
In another gathering in the same week (this one was a more informal meeting) an argument ensued that led to the analysis of the various supposedly easy to start and thriving businesses in Nigeria. One of the rather vehement positions reflected here was that the bakery industry was saturated with too many bakeries struggling for the same market. Numerous examples of bakeries that had closed down in the last decade were brought up to substantiate this position. I was appalled. It then occurred to me that there was a serious ignorance that pervades the business/investment community as regards the bakery business. This experience now led me to commit towards creating a discourse on a popular platform where issues of bread would be discussed and advice given as regards the bakery business.
|Re: Bread Business In Nigeria; Demystifying The Bakery Industry Myth. by ONNYX: 2:23pm On Aug 31, 2018
I also hope both industry players and potential entrants will draw benefits from this thread. I implore all the open minded operators of bakeries and those who are consultants to come on board and let us help those who may be having difficulties in the business by providing solutions that will enable us excel. We all then become winners.
If you have any questions regarding the baking process, the bakery business, ingredients, equipment and staffing, this may just be the thread that solutions can be drawn from.
While I cannot stop posters from advertising their products and services here, I can only state clearly that while this could be useful I cannot vouch for any advert or indeed any solution provider. You will need to do your due diligence before deciding if you need to contract a service or purchase a product.
|Re: Bread Business In Nigeria; Demystifying The Bakery Industry Myth. by ONNYX: 4:00pm On Aug 31, 2018
I think we should start by doing an indepth study of the bread industry in the last ten to Twenty years.
There have been several modernized bakeries set up in this period.
Prior to this time there were traditional bakeries with a few industrialized ones here and there.
We had all manners producing different types of breads. These differences were rather noticeable in size and by extension pricing.
Essentially the supply has been rather streamlined to reflect only what is perceived to be the demand of the populace and as such only the regular white flour bread was made and investors were just happy enough if they could smile to the banks with as little innovation as possible.
To a large extent that is still the picture today. At the beginning of this century (between 2000 and 2010 precisely) there was an avalanche of industrialized bakeries set up in different parts of the country. The advent and boom of the fast food industry also increased the number of bakeries in the country significantly. It would be important to note here that some of these bakeries were foreign owned outrightly, foreign franchises and sometimes set up with foreign investment.
|Re: Bread Business In Nigeria; Demystifying The Bakery Industry Myth. by ONNYX: 4:09pm On Aug 31, 2018
In the wake of this fast food boom we also had a few specialized bread shops springing up in different locations too with catchy names and located in places where you could not miss them. They served a potpourri of products with their emphasis on family sized breads but at really above the mark prices.
In all of this, a support industry also evolved and equipment supplier representatives set up shops, special raw material shops also sprang up and a cluster of these sales guys created market clusters.
Some major equipment manufacturers set up shop and started serving the bludgeoning market.
Of course there also developed a vibrant second hand market for equipment of sorts.
Equally important was the development of expertise for repairs and sometimes fabrication solutions.
Along the line came a revolution in our shopping culture with the berthing of the shopping malls in Nigeria. Big shopping brands launched here and some of them came with their in-house bakeries and further took advantage of the gaps for superior quality bread.
All of a sudden, it was like there was a total reawakening with queues growing longer by the day. A visitor to Nigeria would be led into thinking that bread had just been discovered in Nigeria.
I can tell you that this is just the beginning and the end is not in sight. We need hundreds of new and really large bakeries. In the course of our deliberations I will bring in snippets of information extracted from the results of varied and different research efforts I have been privileged to partake in this industry during the course of many years.
One thing I hope we all can learn from this thread at the end of it is that the product bread has an inelastic demand and that the product supply is yet to meet the actual national demand. This may not appear as the case to the untrained eye but I can assure you that there are a few tricks and intrigues in the business which only experience or a proficient guidance can unveil. Open your eyes wide and you will notice that new labels are being launched everyday and honestly they are all selling one way or the other.
Quite frankly, some bakeries are also closing down too. We shall examine the reasons why this is happening and I will bring some examples from to support my thesis. Some of these examples will be drawn from Nairaland.
It has indeed a wonderful phase.
|Re: Bread Business In Nigeria; Demystifying The Bakery Industry Myth. by ONNYX: 4:16pm On Aug 31, 2018
So here we are.
An industry that has grown in leaps and bounds and yet it is growing larger by the day and quietly so.
|Re: Bread Business In Nigeria; Demystifying The Bakery Industry Myth. by ONNYX: 4:38pm On Aug 31, 2018
In the contemporary scenery, we can see a complete and independent industrial chain that starts with the wheat importation by independent players (who obviously have formed a cartel of sorts), large flour mills and of course some smaller players too.
The milling process is a spawning industry in itself. Milling as an industrial process is also carried out by large, medium and small players alike. There is the flour sales spectrum which has produced a lot of Millionaires in hard currency. Indeed for some of us it will be a huge surprise if we were to be introduced to the wonderful business of Flour merchandising.
I suggest that we take some time off and deviate from our main course discuss the different segments of the entire value wheat/flour/bread ecosystem at least in broad terms.
We could draw some insights here and maybe a few people may be motivated into launching into the any of these segments.
|Re: Bread Business In Nigeria; Demystifying The Bakery Industry Myth. by ONNYX: 4:50pm On Aug 31, 2018
We could start with discussing the Wheat business.
Obviously a very profitable business done quietly and in a most coded fashion.
I am sure there is a mafia running this operation and making it nearly impossible for new entrants to have a foothold.
You would be surprised that a very few number of people are involved in this business.
Can someone post a contribution here as regards this segment?
|Re: Bread Business In Nigeria; Demystifying The Bakery Industry Myth. by ONNYX: 4:59pm On Aug 31, 2018
My next post will come after at least a few posts.
I need to have the active participation of readers.
|Re: Bread Business In Nigeria; Demystifying The Bakery Industry Myth. by Proselling: 9:24am On Sep 03, 2018
Hello Op, you do have a most appealing manner of expressing your thoughts.
Can you please continue with your narrative. I have visited this thread over 10 times over the weekend just to confirm that you were back from your hiatus.
You dont need to wait for other peoples post before continuing.
Just keep the thread alive by posting every day. Once again, I must admit that reading fro you is quite impressive.
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|Re: Bread Business In Nigeria; Demystifying The Bakery Industry Myth. by Harmthe(m): 10:22am On Sep 03, 2018
am enjoying this informative post
|Re: Bread Business In Nigeria; Demystifying The Bakery Industry Myth. by greatcrown: 10:33am On Sep 03, 2018
@OP please keep the thread going you are doing a great job!
|Re: Bread Business In Nigeria; Demystifying The Bakery Industry Myth. by ONNYX: 10:14am On Sep 04, 2018
Wheat is the primary and base raw material for the production of flour which in turn is the foundation raw material for commercial bread making.
There are of course different varieties and species of the wheat but on a general note most of the wheat is very suitable for bread. Nigeria does not as of today produce wheat in commercial quantity.
It suffices to assume that over 99 percent of wheat used in the milling industry is imported. The major players in the importation of wheat are of course the large flour milling companies; Golden Penny, Dangote, Honeywell, Diamond flour Mills,etc
There are other importers of this produce too who may not be very well known but who are importers nonetheless. The big question is where does our wheat come from?
The major wheat producers in world are ranked by order of production capacity as follows;
China (126 Million Metric tons)
India (95 Million Metric tons)
Russia (60 Million Metric tons
USA (55 Million Metric tons)
France (39 Million Metric tons)
Please note that the above are 2016 statistics as extracted from https://www.worldatlas.com/articles/top-wheat-producing-countries.html.
|Re: Bread Business In Nigeria; Demystifying The Bakery Industry Myth. by ONNYX: 10:57am On Sep 04, 2018
It is however an interesting contrast that the largest producers are not necessarily the largest exporters of wheat and its associated bye products.
Until a few years ago the USA was the largest exporter of wheat and its related products controlling over 15% of the global supplies. Russia came a distant second followed by Canada, Australia and France in that order.
It is also worthy of note that about 40 years ago the Russians were dependent on America for wheat importation that was meant to augment their shortfalls. Recently they topped the charts as the top wheat exporters globally.
As a tidbit it will interest you to know that the largest importers of wheat is Egypt.
Nigeria as of 2016 official records show that Nigeria imported a total of 4.3 Million metric tons of wheat.
Our greatest wheat source used to be the USA but there has been substantial importation from China too especially when one considers that China as the largest producer of this commodity and other grains plays a very significant role in shaping the market dynamics across the globe.
Honestly, the wheat business is a most appealing business for those who wish to consider its importation. Other countries that one could consider that may offer cheaper (though different species) of wheat are other large producers like Pakistan and Germany.
Several attempts have been made in the past by government to explore the possibility of growing wheat locally. Some of the importers like Golden Penny Flour Mills have also invested massively in the cultivation and development of a local wheat specie. So far the results have been rather poor and discouraging.
Aspiring investors could look at the possibility of investing in the importation of wheat on behalf of millers and honestly I will state here that the business will be very profitable and a wholesome venture.
|Re: Bread Business In Nigeria; Demystifying The Bakery Industry Myth. by ONNYX: 11:26am On Sep 04, 2018
The business of milling is also a very profitable business.
While I agree that it does require some technical expertise but nothing is too delicate or complex about the process.
Previously, milling used to be considered a very capital intensive operation but the Chinese have revolutionized it in such a way as to allow small players to have soft landing when considering an investment in that segment.
These days we have milling plants/equipment that are small enough to fit into a reasonable sized living room.
These of course are designed for small operators who probably have very low demand for processed flour.
I am willing to direct interested readers into procuring any milling equipment from China.
|Re: Bread Business In Nigeria; Demystifying The Bakery Industry Myth. by connkg(m): 1:06pm On Sep 04, 2018
In your opinion, ONNYX, why was the result of growing a local wheat specie discouraging?
I have work experience in Pulp and Paper, and there's that problem, too. Start-up raw material importation.
We should have both long fibre pulp and short fibre pulp here in Nigeria (based on climatic conditions).
I would also like to get a lecturer's input, especially one from a University of Agriculture.
|Re: Bread Business In Nigeria; Demystifying The Bakery Industry Myth. by Femoje(m): 1:32pm On Sep 04, 2018
Nice post, weldone sir.
|Re: Bread Business In Nigeria; Demystifying The Bakery Industry Myth. by ONNYX: 1:34pm On Sep 04, 2018
Thanks for this input.
All manners of excuses were advanced for the failure of the wheat crop. The most popular one was the fact that we were not in the global wheat belt. To those who would rather view these things from a tertiary pedestal, this may appear very satisfactory but a closer view will indicate that this far from the truth. Or better still, something could still be done about it. there are several wheat plains that do not fall within the original wheat belt.
The prairies of North America, the great plains of Canada all poised initial challenges which have all been overcome over time. In the Mid West USA I have been fortunate to visit farms that grow great wheat species that could not be sustained some 100 years ago on the same plains. There is this farm in the outskirts of Manhattan Kansas that grows a particular type of wheat that is a very rare specie and is shipped for the consumption of the king of Jordan and a few other Sheiks in the middle east. A Saudi Sheik even endowed a professorial chair in the kansas State University just for the further development of this wheat specie.
I think if a serious entrepreneur showed enough resolve, the solution would have popped up and while we would not be able to grow into great wheat exporters we would immediately be able to reduce our foreign exchange expenditure in wheat importation while looking forward to becoming self sufficient.
Pulp and paper is a very under explored area in this country.
I have just skeletal knowledge of pulp and paper business and I do believe that with the right focus we could replicate the wonders Malaysia, Indonesia and Belarus have attained with Pulp and paper.
The Nigerian newsprint manufacturing company located in Oku Iboku, Akwa Ibom State comes into mind. This was such a wonderful idea conceived to wrest us from the shackles of newsprint and to some extent paper importation but alas it failed from scratch.
I am wont to agree with you that seeking a collaboration with a University of Agriculture may be a good approach as most of them have a good reputation in research and development. Abeokuta and Umuahi are top of my list.
|Re: Bread Business In Nigeria; Demystifying The Bakery Industry Myth. by ONNYX: 1:54pm On Sep 04, 2018
As we progress on the thread we will get to a point where we will analyze in detail the various equipment required to set up a bakery at different levels; small, medium and large scale. We also look at the other issues like recipe formulation, staff management and very importantly how to compete in the supposedly already saturated market.
|Re: Bread Business In Nigeria; Demystifying The Bakery Industry Myth. by ONNYX: 12:56pm On Sep 06, 2018
In the supplies segment of the bread business value chain you also have enterprises focused on providing value through the sale so the essential raw materials used in the bread production process.
In order to achieve an effective analysis I intend that we examine this business from two trajectories. The first one will be the primary raw material which is flour.
This analysis will also include sugar which is a prerequisite for traditional bread production.
The second post will seek to examine the other raw materials that also make up the recipe for bread.
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|Re: Bread Business In Nigeria; Demystifying The Bakery Industry Myth. by jomolu: 8:25pm On Sep 06, 2018
Hello,Thank u so mush for writting these post on bread baking.
Pls we are following and will like you continue with this thread on daily bases.
Let us know what it takes to start a small scale bakery and all the machines needed and there current price.
|Re: Bread Business In Nigeria; Demystifying The Bakery Industry Myth. by ONNYX: 4:48am On Sep 07, 2018
Thanks! This is very encouraging.
Thats the overall intention.
At some point we will do an analysis of the equipment requirements for a small, medium and mega bakery.
We will however approach this systematically. We will touch on every aspect of the bread business.
Our posts today and this weekend will review the bakery support business especially from the raw materials angle.
Everyone cannot invest in direct bread making. Some people may consider the merchandising of bakery raw materials like flour, sugar and other raw materials.
|Re: Bread Business In Nigeria; Demystifying The Bakery Industry Myth. by ONNYX: 10:38am On Sep 10, 2018
The distribution network for bakery raw materials is very robust. Different traders ply this trade in open markets and as warehouse distributors.
We will begin with the non-flour ingredient merchants.
These are the traders who sell most of the other raw materials used in putting together the bread we all eat. As insignificant and silent they may appear in the bread process their activity cannot be under estimated. They are involved in breaking bulk fr the SME’s and even the medium scale operators who would ordinarily not have the financial muscle required to buy directly from the manufacturers and their representatives.
Products they are involved in selling include but are not limited to the following; Margarine, Baking Powder, Yeast, Preservatives, Dough Improvers, Industrial Milk Powder, Flavours and a number of other products.
Mostly these people ply their trades in many markets across the length and breadth of this country. In Lagos the importers of these raw materials can be found in different locations including Ojota, Ilasamaja, Apongbon among other markets. They are more likely to be found in clusters as the homogeneous nature of the trade has a strong pull in bringing them together.
This does not in any way imply that the large scale purchase of these materials are limited to the above listed locations in Lagos.
Many retailers come from across the country and shop directly from the importers and then sell them in the major and minor markets like Agege, Ipodo, Ogba, Yaba, Dugbe, Sabon Gari, Watt, Akpan Andem, Cemetary, etc.
You would have noticed some of these shops and they are usually characterized as bakery support businesses. Some of the things you see displayed are empty butter buckets, cake decorations and sometimes small baking tools like cookie cutters and rolling pins.
|Re: Bread Business In Nigeria; Demystifying The Bakery Industry Myth. by ONNYX: 10:57am On Sep 10, 2018
It may interest you to know that some of the raw materials being brought into the country are a near monopoly.
There is enough room for further investments especially for those who can muster medium to large capital.
I will provide further insights into the modus of some of these segments in subsequent posts.
I am hoping that some readers will draw the courage to invest in these areas with a view to reaping the profits therein.
|Re: Bread Business In Nigeria; Demystifying The Bakery Industry Myth. by ONNYX: 3:06pm On Sep 10, 2018
Going further I could reveal some secrets to you as regards this very sparsely populated business segment.
|Re: Bread Business In Nigeria; Demystifying The Bakery Industry Myth. by Oktane: 7:15pm On Sep 10, 2018
A great thread in the making.
This is a list interesting thread.
Your writing is flawless and your analysis quite in-depth. Please try to continue even if it's on an irregular pace. Be consistent and know that you coukd just helping someone out there.
|Re: Bread Business In Nigeria; Demystifying The Bakery Industry Myth. by ONNYX: 12:50pm On Sep 11, 2018
Margarine is actually a major raw material in the bakery business.
The largest source of superior quality margarine is Holland.
I daresay that they are reputed to have the best margarine brands in the world.
Recall their exploits in the Dairy business and then link the fact that Margarine is a dairy product and there……Bingo.
Malaysia and Indonesia also export a lot margarine but the quality does not measure up to the European brands.
Most of the European margarines for industrial use are packed in 10 kg buckets.
The foremost and market leader of European margarine in the market is based in Surulere.
Their product is marketed as Topper brand. Other European brands in the market are Remia, Cook Brand, Clematis and Donald Cook among others. (There is a most intriguing issue here and it is a most interesting phenomenon and it could contribute significantly to the bottom line of the baker …..only if he knows).
Unfortunately it would be unfair for me to reveal that fact/advantage/experience right here in public.
The Asian Butter types are branded as NAPA, VItali, Jubi, Hano, etc. These usually come packed in cartons of 15Kg. Some of the Asian brands also sport a 10kg bucket pack.
I take the liberty of adding that the Margarine industry (both European and Asian) is dominated by the Indians.
The largest importer of them is located in Surulere. Only very few Nigerians are fringe players in this segment.
|Re: Bread Business In Nigeria; Demystifying The Bakery Industry Myth. by ONNYX: 1:06pm On Sep 11, 2018
Yeast is another high selling product.
There varied brands in the market but over time just two brands have become household names. Alas, the importers are in this instance Nigerians. May I add that there is room to accommodate more yeast importers.
Truth be told, yeast is used by practically every baker. A more interesting and inspiring way to look at it is that for every bag of flour produced there is a chance that a pack of 500 grammes yeast will be consumed. So you can just imagine the volume of yeast consumed nationwide within the space of one year.
I have received a very special pack of yeast which I tested in my bakery and I can tell you it was a better product that what is obtainable. And better still it is even cheaper. The product is from China and they seek Nigerian Partner/Distributor. Contact me if you are interested.
|Re: Bread Business In Nigeria; Demystifying The Bakery Industry Myth. by ONNYX: 2:08pm On Sep 12, 2018
The actual Bread making stage is what we will discuss next.
A lot is involved at this stage.
This is the more common stage of the business and what you have here is what most people know.
This is the actual bread production process.
Getting the ingredients together and then ensuring that the bread comes out wonderful enough to be differentiated from the already existing breads that we have in the market already.
While it is true that there are several different brands of bread in the market produced by thousands f bakeries all around the country it is also a truism that not all breads sell well enough to guarantee the profit of the producer.
We are going to talk about the bread making process here and while at it we will identify the various stages in the process, the ingredients required and of course also the equipment that is needed for the take-off of the bakery while of course taking cognizance of the relative take off capital/capacity of the investor.
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|Re: Bread Business In Nigeria; Demystifying The Bakery Industry Myth. by connkg(m): 11:07am On Sep 13, 2018
ONNYX, so you own a bakery?
I look to help poach good staff from GR*ND. Their bread rocks!
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