Folasope Aiyesimoju is the group managing director of UAC of Nigeria Plc, a company operating in the food and beverage, real estate, paint and logistics sectors in Nigeria. He speaks with BUNMI BAILEY and FOLAKE BALOGUN on how one of the country’s oldest manufacturers has continued to thrive despite the tough business environment.
Could you provide an overview of the developments and changes that have occurred since the company transitioned to new management?
It is important to note that no institution has thrived for over a century without reinvention. The company has been innovating since inception and our commitment is to continue to do so. Today, the holding company is home to some of Nigeria’s most admired brands, with the widest distribution networks.
Every day, we sell goods and provide services consumed by millions of Nigerians in every region of the country under our product portfolios such as Gala, Supreme Ice Cream, Swan Water, Fun Taime Coconut Chips, Dulux, Hammerite, Caplux, Hempel, Sandtex, the Debonairs Pizza, Mr. Bigg’s, and Grand Pure Soya Oil.
In terms of our manufacturing operations, we have nine factories across the North, South, East and West of Nigeria, with a significant portion of all raw materials being sourced locally.
Mr Bigg’s, one of your fast-food brands and the oldest quick-service restaurant in Nigeria, rebranded its business and expanded its menu offerings in 2022. What led to this move and how has the restaurant fared since then in terms of sales?
The journey to rebrand Mr Bigg’s stemmed from our dedication to achieving excellence in both product offerings and service delivery. Our pursuit of excellence is evident, as we consistently strive to ensure that consumers have a positive encounter with all our brands.
Upon conducting a comprehensive assessment of Mr Bigg’s performance, it became clear that the brand fell short of the standards we hold ourselves to. In response, we established new benchmarks and committed to the possibility of discontinuing the brand should it fail to meet these benchmarks. This decision was guided by a clear definition of financial loss and substandard consumer service.
Having established our minimum threshold, we meticulously assessed the requisites for delivering the exceptional service that has become synonymous with our brand – thus, the decision to embark on a rebranding endeavour.
In a nutshell, the rebranding was driven by our unwavering commitment to delivering superior quality products and services to our consumers.
According to the group’s 2023 financial statement, it reported an after-tax profit of N8.9 billion in 2023, a recovery from a loss of N3.9 billion in 2022. What contributed to the growth in earnings despite the tough business environment?
An essential consideration revolves around our consumer-centric nature because, at UAC of Nigeria, our accomplishments hinge significantly on the Nigerian consumer. Therefore, as we celebrate our impressive numbers, it is imperative to acknowledge and give credit to the resilience exhibited by them.
Internally, a key driver for our success lies in the effective implementation of our strategic initiatives – fundamentally centered on fostering a workforce of excellence, cultivating strong brands, and establishing nationwide distribution channels.
All our business units are headed by outstanding leaders who oversee operations, and we invest substantial effort in nurturing and empowering these leaders to assemble high-performing teams. We regard this as a key differentiator, forming an integral part of our unique selling propositions.
In addition to this, we are fortunate to have dominant brands in the sectors we operate within as they continue to hold top spots in their respective product categories. In bolstering our market position and performance, we ensured the establishment of robust distribution networks, the implementation of effective management frameworks capable of navigating the business landscape regardless of the situation, and an intensified focus on enhancing our operational processes and technological capabilities.
The culmination of these efforts produced the set of results that we recently delivered.
How have price increases across all business segments shielded the company against the high cost of operations?
An in-depth look at our recently published results reveals remarkable growth in two key segments within the group which are the paints and packaged food businesses each experiencing consecutive quarterly expansion of 114 percent and 125 percent respectively.
Similarly, within our animal feeds segment, which recorded over 30 percent growth additionally, the oil business of Grand Cereals grew by over 120 percent. In achieving these results, our strategic focus revolved around talent acquisition, optimised distribution networks, and the effective use of advanced technological processes. We are fortunate to be seeing the results come through broadly across all businesses.
How has it contributed to Nigeria’s economic growth and development since the company was founded in 1879?
Whilst I cannot explore records from as far back as 145 years, at this time, what I can offer is an insight into our present-day impact. As an organisation, we have consciously opted to remain a domestic manufacturing entity, and the economic impact of domestic manufacturing cannot be overemphasised.
Firstly, we directly employ close to 5,000 individuals who work across our numerous factories. Each of these facilities relies on a network of close to 2,000 suppliers providing raw materials, packaging materials, transportation, and related services. The products we manufacture are distributed to the market by a network of around 1,000 distributors, and subsequently sold by thousands of retailers.
Our value addition occurs within Nigeria, resulting in substantial contributions to both individual income taxes and corporate income taxes. We maintain a strong presence within our host communities, actively engaging and supporting local initiatives.
In addition to this, we recently relaunched the UAC academy, underscoring our commitment to attracting, training, and nurturing talent across the group, and we maintain robust graduate training programmes.
While some aspects of our impact are tangible and easily quantifiable, such as our revenue – this year expected to total over N160 billion – we also place significant emphasis on intangible contributions. For instance, our domestic procurement exceeds N110 billion, demonstrating our commitment to supporting local industries.
Additionally, we have made substantial investments in talent development and community engagement. In regards to environmental stewardship, our efforts are evident in our transition to cleaner fuels, including solar energy installations at two of our factories, alongside the adoption of biomass and gas. We take great pride in our intangible contributions and remain committed to making more impact.
What are the cost-saving initiatives employed by the company, particularly with regards to energy efficiency?
In the simplest form, acquiring goods can involve two approaches: importing them and selling them – which requires a small warehouse with minimal staff – or establishing a substantial manufacturing facility.
Opting for the latter involves importing raw materials, converting them into finished products, and subsequently distributing them to the market. Across our operations, we have consistently chosen the more intricate path by prioritising domestic production. Our product offerings heavily rely on agricultural inputs such as soybeans, maize, calcium carbonates, and packaging materials.
We actively endeavour to cultivate domestic supply chains for these raw materials, gradually transitioning from a historical reliance on imports to fostering partnerships with local entities that meet our quality standards.
In terms of cost-saving measures, we adopt a dual perspective. Firstly, we recognise that ensuring long-term viability entails delivering value to consumers by enhancing operational efficiency and eliminating inefficiencies. Secondly, sustainability plays a pivotal role, in driving initiatives aimed at waste reduction and resource optimisation.
For instance, in our food business, we have successfully reduced energy consumption per unit of output by approximately 33 percent, resulting in significant cost savings while promoting environmental sustainability.
Additionally, we have made considerable strides in streamlining distribution networks. For example, if you had the opportunity to consolidate trips that a truck will take from Jos to Onitsha, you have not only reduced costs but also enhance sustainability efforts. Also, central to our endeavours is the persistent pursuit of delivering greater value to consumers.
Lastly, we firmly believe that there is a distinction between prudent spending and wasteful expenditure. While we are violently opposed to waste, we perceive strategic spending as investments, demonstrating our willingness to allocate resources where they generate lasting value.
What has kept the business running at a time when manufacturers are either leaving the country or closing shop?
Once again, from our worldview, we give credit to the resilience of the Nigerian consumer, and I believe that our first quarter figures demonstrate our strategic approach which further reinforces our conviction.
We are actively positioning ourselves for growth, acknowledging that each entity adopts a distinct strategy and interprets the business landscape differently. We perceive an environment characterised by a government conducive to business operations despite prevailing economic factors.
Lastly, we can discern policies that, over time, will foster growth, and thus, capitalising on these opportunities to drive our own growth trajectory.
What sets UACN apart from the others?
At the very core of our business, we know the fundamentals of understanding our customers, simplifying their experience, and delivering what the customer desires. Considering Nigeria’s population of over 200 million people, our market offerings encompass food and paint.
Amidst the multiple uncertainties, one certainty remains: Nigerians will continue to consume food for generations to come. The pivotal question and task before us are ensuring that when Nigerians seek dining or painting solutions, they choose our products. This is the lens through which we approach our strategy, and we are pleased to receive positive responses. Our charge is to consistently meet this expectation, to fuel our sustained growth trajectory.
As a finance professional with experience spanning across corporate finance, principal investing, and private equity, what advice would you give the government in improving businesses, especially for manufacturers?
The first thing I would say, which I believe should occur more frequently, is to acknowledge and appreciate the efforts undertaken by the administration thus far. One year into its tenure, we recognise the positive strides made in steering the country in the right direction.
What are our hopes for the outcomes of these initiatives? Firstly, a crucial priority for the government is bringing inflation under control, and we commend the bold measures taken toward achieving this goal. Some accomplishments have already been realised under the current administration, notably in record time.
Furthermore, discussions regarding increased investment in infrastructure are promising for businesses like ours. However, one area that could perhaps receive more attention – though not to imply that it is being neglected – is a heightened focus on talent development.
As I often emphasise, the cornerstone of our strategy and the primary driver of our success lies in the acquisition of exceptional talent. Therefore, fostering a conducive environment for talent development would undoubtedly yield benefits for businesses like ours.
