Nigeria’s foremost conglomerate and Marketers of tasty, nourishing convenience foods, United African Company of Nigeria (UACN) is planning on raising financing from Private Equity investors, BusinessDay has learnt from a reliable source.
The proceeds would be used to give a facelift to the firm’s distressed foods and restaurant business, Mr Biggs, which has been facing turbulent times arising from stiff competitions and poor management structure, according to a source familiar with the matter.
“The firm has reached out to several PE players and are currently in talks with two investors who were former staffs of the embattled Dubai –Based PE firm, Abraaj”, the person who doesn’t want the name in print as they are not allowed to speak on the matter said.
The source, however, did not disclose the amount the firm plans on raising.
UACN was not available to comment when contacted as the phone number on the website of the consumer goods firm was not reachable at the time BusinessDay was filing this report
UAC is a Holding Company with a number of subsidiary, sub-subsidiary and Joint Venture Companies. It is also involved in some strong regional and international partnerships in a bid to enhance sustainable growth.
UAC is a Holding Company with a number of subsidiary, sub-subsidiary and Joint Venture Companies. It is also involved in some strong regional and international partnerships in a bid to enhance sustainable growth.
The partnerships are: UAC Foods Limited – a business partnership between Tiger Brands Limited, holding 49 percent of the equity and UAC controlling 51 percent; MDS Logistics Limited, a joint venture with Imperial Logistics, which holds 49 percent equity with UAC controlling 51 percent and UAC Restaurants Limited, where Famous Brands holds 49 per cent of the equity, with UAC controlling 51 per cent. UAC also operates successful joint ventures in the real estate business and technical collaboration with Akzo Nobel for the manufacture of Dulux Paints in Nigeria.
Since the inception of UAC as far back as 1879, the firm had enjoyed total goodwill for all its brands controlling about 87 per cent of the Nigerian consumer goods market.
However, the tide turned badly for the conglomerate firm with the rise of Fast Moving Consumer Goods ( FMCGs), that posed a severe threat to the strong consumer brand loyalty that the firm had enjoyed over the years.
Not only did the firm faced strong competition for its consumer goods brands, it also had to compete for market share in other of its subsidiaries including logistics, real estates and paint making the arm.
In 1973, UACN shops were rebranded as Kingsway Rendezvous, and they became Mr. Bigg’s in 1986.
The chain witnessed rapid expansion after becoming one of the first Nigerian companies to sell franchises to investors, with Mr. Bigg’s outlets established in about 170 locations in Nigeria, including the country’s first drive-through restaurant, with other four locations in Ghana.
The demise of the restaurant arm of the firm could not only be traced to intense competition as the source who spoke to BusinessDay argued that the firms’ goodwill and strong customer base was one of the strengths the company had leveraged on before the so-called competition arose.
“The problems of bad management structure, poor corporate governance amongst others are some of the major issues that led to the downfall of the firm”, according to the source. “However, the company hopes to resuscitate the business with the new financing”.
While most other food outlets were fully managed by their respective owners, Mr. Bigg’s went the way of a franchise, which many see as not ripe for the Nigerian market.
Amid the numerous licencing of the franchise, the firm’s bureaucratic structure also culminated into its downfall as several attempts aimed at reviewing the process proved abortive. This also affected many attempts at rebranding the restaurant business to meet consumers taste.
The franchisor-franchisee agreements were not constantly reviewed as many of the franchise did not work on their total quality management. Most were producing low-quality products and even services as there were events where customers complained about being harassed for money by counter guys and security personnel.
“I stopped buying food from Mr Biggs ever since I noticed that they had compromised on their standards”, said a one-time loyal customer of the firm who identified herself as Oluchi. “Their mince-pie became flour/yeast-pie alongside the pilfering of their goods, untidy business environments and inflated procurement prices. I doubt if they studied their competitors”, she said.
UACN operates a franchise scheme, which covers a five-year window. The Marketing contribution structure done by the firm is a monthly 2 per cent of the net proceeds of sales, which goes to a pool.
The marketing department uses the funds towards national advertising and local in-store activations – from which the whole Mr. Bigg’s franchise system will benefit.
MICHAEL ANI
