Nigeria: Processing groundnuts into packaged and branded snacks
In 2015, Ladipo Lawani and his partner, Lanre Ladipo, established L&L Foods, a Lagos-based food processing and packaging company that produces a brand of groundnut snacks called Mr Ekpa. How we made it in Africa spoke to Lawani about the ins and outs of starting and growing a roasted groundnut brand.
The opportunity: packaged and branded groundnut snacks
Nigeria is the third-largest producer of groundnuts in the world and the largest in Africa. However, according to Lawani, about 90% of roasted groundnuts sold in Nigeria are unbranded and packaged informally.
Drawing inspiration from Alhassan Dantata – the Nigerian business magnate and great-grandfather of one of Africa’s richest men, Aliko Dangote – who made his wealth from the groundnut trade, Lawani and his partner teamed up to create L&L Foods with a vision to “become the market leader of the Nigerian groundnut industry”.
He was curious about agriculture and started to research the problems and opportunities in the industry. He found that there was not enough value addition, such as processing and branding, especially for groundnuts, and he realised the company could add value by creating a distinctive brand that offers different flavours and varieties.
Products: From plain to frosted
The company’s line-up of roasted groundnuts includes regular, salted and frosted. It recently also launched a flour-coated peanut product, branded as Burger Peanuts.
Manufacturing and distribution
With its 45 staff members, L&L Foods now has the ability to process about 75 tonnes of groundnuts per month at its Lagos-based facility. The groundnuts are sourced locally from farmers. Then it is roasted, peeled, flavoured, and packaged for on-the-go consumption. L&L Foods currently works with over 80 distribution companies responsible for getting the product into tens of thousands of small mom-and-pop shops across the country.
Sourcing raw materials: Assistance to farmers
To achieve its goal of becoming the largest groundnut processor in Nigeria, L&L Foods invests in the entire value chain by working with about 1,500 groundnut farmers in Kwara State. It has partnered with an organisation called 2SCALE to source high volumes of aflatoxin-free groundnuts from smallholder farmers, through improving productivity and agronomic practices.
By giving farmers better yielding seeds, as well as teaching them improved farming practices, their yields can be increased by 150%. Farmers are also helped to improve the quality of the groundnuts by fixing the problem of aflatoxins – a toxic fungi which was one of the causes of Nigeria losing out in the global groundnut market.
Challenges: Capital and raw materials
Lawani and his partner started L&L Foods with ₦500,000 (about $1,200 at the current exchange rate) and continued to fund the company through personal savings and money from investors. One of the biggest challenges they faced was access to capital, but they managed this by being prudent with money.
Another challenge was to deal with the broken value chain in the Nigerian groundnut sector and getting the right quality raw materials.
Lawani says when he started out he would have loved to have visited another groundnut processing country such as India. They only did that after their first year in the business. As a result of this visit, they totally overhauled their processes. For instance, they now have a grader with which they can grade the groundnuts to the right sizes to prevent uneven roasting.
While a handful of other packaged roasted groundnut products have entered the market, branded products still account for only 10% of consumption in Nigeria.
Growth potential: Increasing capacity
For now, L&L Foods is focused on boosting the production capacity for its roasted groundnut products. However, down the line, Lawani also sees opportunities for additional peanut-related products, such as peanut butter, as well as other snack items like cookies and popcorn, for instance. “There are a lot of opportunities in other categories where we can leverage our competence,” he notes.