The fact that thousands of containers of imported processed food arrive at Africa’s ports every month clearly implies there are opportunities for increased local production. However, producers based locally are by no means guaranteed success as they vie with large multinationals that have been exporting products to these economies for years.
A duo of Swiss-based entrepreneurs, Nicholas Draeger and Guido Schaer, however, believe it is possible to compete against these established players. In 2010, they started a company called Nurevas International which manufactures a range of food products in the West African country of Ghana.
Nurevas currently produces products such as ketchup and mayonnaise from its factory in the capital Accra.
In the ketchup division, for example, its major competitors are Heinz and Nestle’s Maggi brand, as well as companies from the Gulf.
Draeger believes Nurevas can compete with these more established brands. “We designed and scaled the state-of-the-art plant in such a way that it is highly flexible and we can operate it with a small, well-trained team of people at a very high rate so our production costs are optimised,” he explains.
He adds that Nurevas is able to produce its products on relatively short lead times, reducing the need for its clients to stockpile products for months. “Generally retailers and traders are forced to stockpile product for at least three months. That ties up a lot of their working capital; it’s a significant financial risk. We can supply products on demand, which enables clients to turn over their working capital much more frequently.” The flexibility of the plant also allows for products to be produced that are suited to local and regional tastes.
Both Draeger and Schaer have a history of working for pharmaceutical and food companies. Their plan with Nurevas is to eventually enter the field of fortified foods.
“Entering the fortified foods sector, in other words vitamin-enriched nutrition, is much more capital intensive whereas setting up a high quality food production plant is the first step in this strategy. So we believed, as new entrepreneurs, that it was better to get into food production first and then move later into fortified foods once we had established our high-quality reputation,” says Draeger.
Nurevas currently sells most of its products to modern retail chains in Ghana, including groups such as Melcom, Shoprite and Game. It also has clients in the hotel, restaurant and catering industries. Draeger says Nurevas is keen to boost its presence in the traditional sector which includes markets and chop bars.
Draeger says although it is the company’s strategic goal to source as many raw materials locally and regionally as possible, this has proven to be a challenge.
“Up until now it has not been possible to source most of the raw ingredients in Ghana or regionally. For our tomato paste we have been working, and continue to work, on various initiatives to source tomato paste locally in Ghana. Ghana does produce a lot of tomatoes but they are not really the right type for producing a high grade tomato paste. The initiatives focus on supporting the farmers to grow better quality tomatoes and also to establish the high-quality production of tomato paste.”
Despite some challenges, Draeger describes Ghana’s operating environment as benign.
“Our strict no-corruption policy has been well received. So far things have been going well for us. We have been able to establish our high-quality production facility with local constructors while sourcing our state-of-the-art equipment from Europe and the US, and also from South Africa. One issue has been the currency fluctuations. The Ghanaian cedi last year fluctuated quite widely against the dollar.”
Many companies cite a shortage of skilled labour, as one of the biggest hurdles they face in Africa. According to Draeger, this has not been much of a challenge for Nurevas. “One of the biggest challenges people said we would have is finding the right kind of people, the right quality people to work on the plant. We haven’t had that much of a problem.”
Nurevas employs a local general manager who looks after the day-to-day operations of the business.
Infrastructural constraints however, remain a challenge. “Certainly roads, for example, in Ghana are not what they are in Europe but you have to put up with that. We didn’t start in Ghana because we thought the roads were going to be excellent. We started there because of our excitement around the growth of the West African markets and the substantial potential we saw in the desire for quality foods in the region,” says Draeger.