Wemy Industries is a Nigerian company involved in the manufacture and distribution of hygiene products, within the Fast Moving Consumer Goods (FMCG) segment. In this interview with BusinessDay analysts PATRICK ATUANYA and ODINAKA ANUDU, the firms MD Paul Odunaiya speaks on the firms evolution, rapid growth, capital needs, export plans and why customers keep coming back to buy the products. Excerpts:
Wemy Industries has transformed from a little known company into a well-known diaper producer. How did you get this far?
Wemy Industries is an indigenous manufacturer of hygiene products. We produce and distribute baby care, family and adult care hygiene products. When I say baby care, I mean diapers, baby lotions, soaps, baby oil and powder, among others. We also do the feminine line which includes maternity pads, feminine wipes and others. We also do adult diapers and maternity pads.
Our product lines are just hygiene solutions for the masses. We have been in the business since 1978. The founder was my founder, Pastor A.W Odunaiya, and my late mother who was a gynaecologist who came up with the idea of diapers in 1978 because they wanted to go into a kind of business for the future, which was also sustainable. Since my mother worked in the Lagos State Teaching Hospital (LUTH) at that time, she came up with the idea like ‘Ok, let us go into this business, Nappies are often unhygienic.’ By 1980, we were the first manufacturer of diapers in the whole of Africa. We invested in dining and sanitary pads machines and within two years, we paid back loans we had borrowed from the Bank of Industry (BoI). In fact, we havw such a good record at BoI that any time we go there they will be willing to give us money.
Then we could set prices because we were a monopoly. And obviously, things happened in the business. In fact, we kept our money abroad and the bank collapsed and we were in a crisis. We were only able to get back 20 percent of the money and we then had to use Nigerian banks to augment and replace our machines. Once we got into the Nigerian banking system, we started feeling the heat of the Nigeian economy, but we continued tying our best.
In 1994, Procter &Gamble approached us but we did not go with their ventures. We had our misgivings then. This forced us to diversify and grow our business. From then, we had competition and we started diversifying. It has been tough; we have had issues with fraud like any other Nigerian business but we have been able to overcome this. But this business is now going into a second generation as my parents are no more. I was in the United Kingdom for 20 years but moved down in 2011 to help grow the business. Since 2011 when I joined the business, we have been growing new ideas.
You are coming from the UK where access to finance and other things that help business grow are easy to come by, unlike here. How were you able navigate?
The answer to this question is simple. Before coming into Nigeria, I was already an entrepreneur. In the UK, I did some kind of business and was trying to set up mine. One thing about entrepreneurs is to use resources around them to create solutions, to create wealth, using human and financial resources to solve a problem. Coming to Nigeria, it is almost the same. But a lot of things are not here. It means you need to use your entrepreneurial skills in more ways. You need to be creative to make your business work. This means you have to create a power business, a water business and do the solutions. It is the same thing although it is easier in those countries. But they have their own issues as well when you get to that level. The thing there is that return on investment is lower because of these things are there and it is a level-playing field. But here all of these things are not provided and you need more capital, more human resources, more thinking to make things happen. So it is actually an entrepreneurial playground here and it is more exciting. Entrepreneurs do not see problems but solutions.
How did you come about your two brand names ‘Dr Browns’ and ‘Nightingale’?
The fundamental brands we started with was ‘Dr Browns’. It is our brand name. We came up with the name because the founder was a medical doctor and we also said we were browning people. You will also find out it sounds a bit foreign. But this is not a franchise; it is not a copy. It was registered in 1978 and we have used it for a number of years. But when we started developing other such as hospital products, we felt we had to come up with ‘Nightingale’ because it was going to be nurses and doctors that would be using it, especially nurses. So we went with Florence Nightingale and there came ‘Nightingale’. Again, we were coming from a medical background. One of our competitors does soaps, detergent, battery, diaper, and in fact, they do everything, but we are coming from a medical and hygiene business perspective. That reflects on our products. There is a vision, a perspective, a plan. We are not a jack of all trades and master of none. We want to have a country where hygienic products are better; whereby we add value to people’s lives by increasing the quality of lives. Our products will reduce mortality rate because once they use our pads, rather than wrappers and newspapers in hospitals, child and women mortality rates will decrease. We want Nigerians to believe in themselves and support products that are made here.
How do you source your raw materials?
Unfortunately, our raw materials are sourced from abroad. Some of the pulps and glues are got from abroad. We get some cotton from Kano and other parts of West Africa. But we still have some local content. The good thing is that the bigger we become the better for the populace. From the supply side, we will begin to make products a lot cheaper and they will get to the populace at cheaper rates. That is the vision of the company, to get a significant size so that we can give this kind of solution to our people at affordable prices. We might take goods from outside and process them here, which is the value-added side. From the Nigerian perspective we are the ideal business government should support because we are non-oil and we process these, rather than just export raw materials. We are useful in most of the West Africa and sub-Saharan Africa. Most of the West African countries still use wrapper in maternity which is unhygienic and in some places they still import these things. Import-substitution is what the country needs and it is already working for us.
We are in the processing phase and we need to grow at a certain size. The prospects are good. When I joined the business, we had about 120. Today, we are approaching 400. With further growth, we will do about 1000. I keep saying that this is a Nigerian business and the money we make stays here. I think the psychology of the populace needs to change to support what is made here. Some people our products are foreign but we are 100 percent Nigerian.
Tell us about your growth and revenue. Tell us also if you are willing to accept capital from private equity firms that will enable you to grow faster.
Currently, we are the only serious indigenous player in this space. We have competitors and the market is there. When I joined the business, I discovered we had to be more strategic and we formed a new team. We do not do much advertising and we have a lot of monopolistic products, though we have competition from importers. Yes, we are already talking with private equity firms to fund us. But the problem I have with PE firms is that they come with ridiculous valuations. You have more than 30-year business and they can come and value it at $5 million. You need to stand your ground and tell them ‘this is a second generation business; it has a lot of good will in the market space.’ We are working on that. We have got to a point where BoI is not just enough. As a business, we are doing $15 million in turnover and this was achieved just recently. We are growing fast. When I joined the business, we were doing N500 million. But within three and a half years, we have grown the business and it has more places to go. If we have all we need, I see us doing $200 million in five to six years easily and in a decade we will be doing $1 billion. So we are the future of the Fast-Moving Consumer Goods (FMCG) market because women will always menstruate and adults will always suffer incontinence. I believe any financier that wants to get good returns should back our business. It is the future.
How does your export segment look?
In the past, we had offices in Ivory Coast and Ghana. We closed Ivory Coast because there was a war and Ghana because of administrative issues. But at the moment, we have started exporting again. We just started this year. We did some exports to Togo recently. We also have a strategy in place where we identify the needs of each market. We have noticed Francophone countries need wipes and in Nigeria wipes are consumed more In the East. In the past, we did not get our strategy right but this is different now. We are looking ahead in partnering with Evonik to develop a shea butter and coconut oil and process them. Agriculture here is lucrative and we are expected to export to developed countries because we need to find a way of earning foreign exchange.
How far have macro headwinds such as drop in oil prices affected your business? Or do people use your products despite whatever goes on?
Yes, we noticed a slowdown from late December to just before the election. Part of our input costs is dollars because we import raw materials. We had to adjust some of our prices and I am happy we can absorb some of our foreign exchange losses. Thank God we have expanded our business and I think we can take the shock. We had a foresight in 2013 and decided to expand because we foresaw volatility as we knew Nigeria is oil-dependent. I used to sell energy so I know always that commodity prices can fall and this country is commodity-dependent. The only way we can do it is to continue to diversify our business.
The good news is that our business is a necessity business. Women will always use the products and will always have babies. What we need to focus on is to make sure we always produce our goods as cheap as possible. The longer we invest the larger we become.
Did you at any time invest in the gas power plant? And how much does alternative energy cost you?
We have not invested in the power plant yet. We use public power. Alternative power costs us N4 million every month. However, entrepreneurs do not look at problems; they look at solutions. If I get all my machines and capital that I want, the cost spread reduces, even with diesel. Ideally, having the power plant is the ultimate. Thank God Nigeria is blessed with gas. When I studied gas, I found out that we have gas that can feed the whole of Europe. I said to myself, ‘these guys do not know what they have’. Countries are fighting over gas and yet we do not know that the power we leverage by having power pipelines in the coast of Africa will potentially make Nigeria a super power in the continent, not just Giant of Africa by name.
Do you plan to go public?
We have plans to go public in the next four years.
We have plans to go public in the next four years.
How do your products compete with Chinese? And can you tell us about the quality of your products?
Our business is a re-order business; that is, once someone buys it once, they have to buy it again. Once you make the product un-buyable again, you are out of business. And we have been in business for over 30 years. Once the quality and standards drop, you are out of business. The essence of this business is quality. We have a quality control department with about 22 people and the team is growing. Heads of the unit have trained abroad at some point. We have partners like SON and NAFDAC that come in regularly to improve our quality control. We are No 3 in the market but our quality is better than No 1’s. And some of our products are four times better than imported ones.
How do you handle your logistics?
We have our own trucks and we also need to invest in more. That is why we need funds. That is often a challenge in this part of the world, but like I said I see solutions, not just problems.
PATRICK ATUANYA and ODINAKA ANUDU
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