Sample Business Plan on Yoghurt and Ice Cream Production in Nigeria

In this sample business plan on Yoghurt and Ice Cream production, we are looking at the business opportunities, trends, challenges and potential startup costs for setting up a Yoghurt and ice cream parlour in Nigeria. The market opportunity for ice cream and yoghurt production in Nigeria is growing at an impressive rate (over 8% sales growth year on year consistently since 2014) which means savvy investors have a chance to cash in on this growing market. The main problems have been poor power supply, logistical challenges and competition from foreign brands which prevent operators from fully exploiting the local opportunities.

Introduction

Ice cream is a frozen light food usually eaten as dessert. It is a dairy product made from mixing milk with stabilizers, liquid nitrogen, sweetener, flavouring and toppings. Yoghurt on the other hand is milk that has been fermented by a bacterial culture. Both foods are nutritious and delicious but also come at a relatively high price. A big scoop of ice cream for instance in some ice cream parlours goes for 500 naira while Yoghurt often sells at 700 or 800 naira per liter in many big supermarkets.

Ice Cream and Yoghurt description

	Ice Cream	Yoghurt
	1.       Ice cream is usually heavily flavoured and eaten with spoon 2.       Often served in restaurants and ice cream parlours	1.       Sold mainly at supermarkets but could also be sold at restaurants 2.
L-R Strawberry Ice Cream and Fruity Yoghurt Photo credit: bitzngiggles.com and thesun.uk

 

Yoghurt and ice cream are two very well loved snacks eaten by mainly young people between ages 10 and 40. Both snacks are popular on social hangouts and events such as; parties, dates, family hangouts, anniversaries and other social gatherings. Both Ice cream and yoghurt can be packaged and sold in plastic plates, Tupperware, plastic bottles or carton packs. This makes them ideally very convenient frozen foods to mass produce and sell to consumers.

A snack is any meal eaten with a spoon or with bare hands. So while both ice cream and yoghurt are in liquid form, they are both actually food and not drinks.

The local market for sale of ice cream and yoghurt is expected to continue growing in Nigeria due to several social and economic factors that support their consumption locally.

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	Yoghurt	Ice Cream
Local Demand	At least 3 million liters per annum
Raw materials supply	Milk, sweeteners, flavoring and bacterial culture	Milk, flavorings, sweeteners
Key Market Regions	Most Nigerian cities	Most Nigerian cities
Profit margin	Varies but usually less than 100%	More than 100% for custom made ice cream
Market Trends	Rising demand among the middle class	Has high and low Seasonal demand
Buyer buttons	Hot weather, lifestyle habits, healthy dietary needs
Average price/liter	500 naira

 

Market Opportunity

The opportunity to make money from ice cream production and distribution in Nigeria presents itself in many forms. There is a sizeable market for sale of ice cream and yoghurt in Nigeria. A very good location is Lagos which has a large population of young middle class residents many of whom have strong western influences – active users of social media, educated, frequent users of cable TV services and live in decent middle class neighbourhoods. Besides Lagos, there is also Abuja, Port Harcourt, Ibadan and Kano to name a few.

As the middle class population keeps growing, the future of this market will not be undermined meaning more sales year on year. In addition to this is the lifestyle changes seen in the millennial population (people born from 2000 onwards). They have higher tastes for snacks and light meals than the older generations. Incidentally, the millennials make up more than 40% of the total population. But Yoghurt in particular is gaining popularity also because of the health benefits it offers. Yoghurt boosts the immune system, strengthens the bones and teeth and boosts muscle and tissue cells.

Challenges of Yoghurt and Ice Cream Production in Nigeria

•          Poor Power supply
•          Distribution and logistical challenges
•          Inconsistent government policies
•          Declining purchasing power from economic recession
•          Social and economic effects of covid-19
•           Difficulty in accessing milk from local suppliers

There are several other challenges not mentioned here but available on request via email to: paulonwueme@gmail.com

What is the Cost of Setting up Yoghurt and Ice Cream Factory in Nigeria?

The amount required for setting up a medium scale Yoghurt factory with production capacity of 30,000 liters per day starts from 720 million excluding administrative expenses for 1 year, whereas with just over 15 million naira you could setup an ice cream parlour.

Sample First Year Financial Projections

NB: This sample financial projection is only for the yoghurt factory. The ice cream projection is not included. Assuming the factory sells 20,000 liters of yoghurt daily for 300 days in a year at 500 naira per liter, then first year projection could look like this;

Gross sales	3,000,000,000
Gross profit	690,000,000
Operating expenses	420,000,000
Net profit before tax	270,000,000
Taxation	81,000,000
Profit after tax	189,000,000
ROI	26.2%
Payback period	4 years

Paul Onwueme is a professional Business Plan writer since February 2014, has achieved respectable results with his business plan writing service with several of his clients securing funding and leaving positive feedback about his writing service. You can connect with him via phone: 0803 206 4106 or email: paulonwueme@gmail.com

Sample Business Plan: Commercial Maize Farm and Processing Mill in Nigeria

In this sample business plan on setting up an integrated commercial maize farm and processing mill in Nigeria we are going to be looking at whether or not, farming maize for processing is a lucrative business and important issues that affect the success or otherwise of such a business in Nigeria.

What is Commercial Maize Farming?

In a nutshell, commercial maize farming is usually the cultivation of maize on sizeable farmlands exceeding 5 hectares using mainly modern farming practices including agronomic practices, mechanized farming, improved farming inputs, marketing practices and irrigation (to name a few). People engaged in commercial maize farming are typically trying to produce large quantities of maize for onward sale either to factories, or other processing mills rather than trying to sell it directly to middlemen.

What is Maize Processing?

Maize processing is the conversion of harvested maize crop from its natural form into semi commercial and edible forms. The processing of maize can include; conversion of maize cereals into flour for baking bread, flakes (breakfast cereal),

How profitable is maize farming and milling in Nigeria?

Maize farming is a very profitable business to do with returns as much as 170% per farming season provided important variables don’t affect post-harvest sales. The profit margin usually doesn’t fall below 60% provided standard modern farming practices are used throughout the farming season. Maize milling on the other hand

Overview of the Maize Crop

Crop type	Cereal
Price per ton	130,000 to 150,000 depending on season
Farming Seasons	March/April (early maize) and June/July (late maize)
Uses	Staple food, animal feeds, corn flakes, flour etc
Types	Yellow and white maize
Typical investment	320,000 naira per hectare
Return on investment	60 to 170% per farming season

Uses of maize

Maize or as is more commonly called corn (botanical name: Z-mays) is the most commonly grown crop in Nigeria after cassava. It is highly nutritious containing carbohydrates, proteins and vitamins. The maize crop has many uses from edible staple meals such as; Pap, Tuwo and even boiled or roasted and eaten directly. Maize is also used in preparing commercial and industrial products such as in the production of corn flakes, syrups, flour, brewing of non-alcoholic beverages, organic manure and production of roughages/forage for ruminant animals. As a result of these diverse uses, a cattle ranch or poultry farm can also operate a maize crop farm as part of an integrated farming venture to maximize yields and profits.

Read this article: Cassava Processing Business Plan in Nigeria

Market Situation of Maize in Nigeria

The Maize crop is usually sold in bags of 75kg or 50kg in open air markets. As of December 2020, Nigeria produced more than 8 million tons of maize per annum which is less than the actual 11 million tons of maize consumed in 2019. What this means is that local demand for maize exceeds supply level. That is a positive sign for maize farmers – they can easily sell their produce. The reality though is that is rarely the case as the middlemen traders deliberately frustrate the marketing aspect of maize production which makes farmers earn less than they deserve and the end users pay more than they should.

Despite this challenge however, maize cultivation and marketing are still lucrative for savvy farmers who know how to bypass middlemen. The industrial demand for maize is at least 4 million tons per annum – the main buyers are breweries, food processing companies and feed mills. That is an aspect of the

 

Consumption level	11.8 million metric tons
Production level	8 to 10 million metric tons
Processing and industrial demand	Between 45 and 50%
Price of Maize per ton	Varies from 130,000 to 180,000 naira per ton
Market trends	Growing interests from local maize

 

For more information about market opportunities and insights into maize production and marketing in Nigeria do send me an email to: paulonwueme@gmail.com or for a marketing plan or research.

Opportunities for Maize Production

Maize consumption in Nigeria has historically been on the rise as far back as 1960. Year on year increase in demand for maize has varied from as little as below 1% to as much as 16.7% recorded in 2014. The reasons for this consistent increase in sales (demand from consumers) have varied from rising population, growing middle class, rapid urbanization and ban on importation of food crops.

 

Since maize is produced in Nigeria is only sold locally and there is insufficient supply for maize, it is therefore a highly demanded crop. As a matter of fact, there is a shortfall of over 1.9 million metric tons from the supply end.

 

Urbanization in Nigeria is playing a huge role in driving sales for maize products. Locally maize is processed into pap and custard (also sweet corn and corn flakes) which are popular on the menu of many cities and suburban towns in Nigeria. The growing culture of a man, wife, kids and maid residing in a rented apartment drives home the point about maize being a staple meal.

 

It has also high demand from the industrial end. Local breweries and food companies order for large quantities of maize to process into various drinks and beverages which are then sold to the local market. How about the companies which produce animal feed for poultry, pigs and ruminants? There are more than 900 million poultry animals in Nigeria and at least 12 million cattle – that is a very large market for feed mills.

Government economic policies and programs are currently in favour of local maize production. There are agricultural policies which encourage local farmers in terms of being able to access improved farming inputs, farming practices, access to soft loans and marketing systems that enable farmers readily reach their intended sales and income goals.

Added to this is the profit margin on maize production. The total costs for planting and harvesting maize per farming season is 320,000 naira per hectare whereas the revenue potential can vary from 420,000 naira to over 600,000 naira per hectare – your profit would depend on the number of hectares under cultivation and number of planting seasons per annum.

Challenges of Maize Production

Maize farming also its challenges, for instance there is the problem of insect pests and nematodes which can severely ravage a planting season leading to losses for the farmers. There are also problems such as; nomadic cattle herders whose animals often stray into people’s farms. Maize farmers will also contend with disease infestations, high cost or scarcity of farming inputs and strong competition. Also irrigation farming which is a crucial success factor is difficult to achieve for most farmers. 

How much is required to start a Maize Farming and Processing Mill in Nigeria

So far I have been focusing on mostly maize farming but there is the processing end to it. Maize processing is a highly profitable venture when it is part of an integrated system. Maize can be processed into powder, flour or starch. The stalk and leaves can be processed into forage or silage but that will depend on the technical and financial readiness of the investor. Details about investment cost for maize processing is available on request. For the farming aspect, an investment of 320,000 naira per hectare of land is a sufficient startup amount if one is looking to operate optimally – at ideal production level, profit margin and crop yield. Most of that investment would go into inputs.

What is the return on investment for maize production and processing?

That would depend on various factors but an optimally run maize farm also engaging in processing of maize. A minimum of 60% return on investment per planting season to as much as 170% (actually even more if the best crop yield can be achieved) is a feasible range to aim for.

Paul Onwueme is a professional Business Plan writer since February 2014, has achieved respectable results with his business plan writing service with several of his clients securing funding and leaving positive feedback about his writing service. You can connect with him via phone: 0803 206 4106 or email: paulonwueme@gmail.com

Sample Business Plan: Setup of Supermarket in Nigeria

This is a sample business plan for the setup of a medium scale supermarket in Nigeria. A supermarket is a large retail mart that stocks a wide range of consumables although in Nigeria people often times mix up the term with grocery store or convenience shop. Simply put, a supermarket is a self-service shop wherein people can move about with a shopping basket to order for whatever product they wish to buy and pay for them at a counter where a cashier receives the items, scans them then presents the customer with a receipt for payments.

In Nigeria, there are very few standard supermarkets – the ones that have well stocked and organised product segments that can guarantee customers a one stop shopping experience. Notable supermarket brands in Nigeria include; Ebeano Supermarket, Next, Grand Square, Shoprite, W2 Supermarket, Park ‘N’ Shop, 411 Supermarket, Sahad Stores to name a few.

The Business Opportunity for Supermarkets in Nigeria

Nigeria is largely a consumer economy with large middle class population - roughly between 23 and 38 million people – with strong western influences and is inclined to purchase lifestyle products and consumables. Most of its middle class are young families with reasonably educated parents and who fall within an income bracket that can purchase range of products such as; detergents, groceries, skincare products, healthcare products, processed foods, toiletries, electronics, stationery to name a few. The average middle class family spends at least 60,000 naira monthly on consumables for a family of 6 and this market segment accounts for at least 2.3 trillion naira per annum in retail sales. That means this market segment is still underserved in as much as it should even with over 2 billion dollars invested in this industry since 2010.

Supermarkets should not be confused with Convenience shops even though they sell similar products as supermarkets- they aren’t always self-service and very often don’t offer one stop shopping option to customers. You would typically also find them in neighbourhoods and residential areas.

Challenges of Owning and Running A Supermarket in Nigeria

The major challenges come from declining purchasing power of potential customers since 2015 and rising cost of doing business in the country. Many Nigerian businesses operate within a hostile business environment with power cuts very common. Price of fueling and maintaining generating sets is astronomical. Then there are occasional threats from armed robbers and looters as was the case with #endsars protests and reprisal attacks against South African xenophobic attacks – but this are rare. There is also the challenge of theft from staff. Also finding a very good location for this business is a big challenge as it usually isn’t easy tom come by and even when it is often comes at a high price.

Where are good places to site a Supermarket Business?

Ideal locations are busy and conspicuous places with good parking space in middle class locations in any of the major consumer market cities in Nigeria. For instance big cities like Ibadan, Lagos, Kano, Kaduna, Port Harcourt, Benin, Abuja and Warri. Owning the building is a long term advantage however renting our spacious shopping space is still a viable alternative.

Start-up Requirements

The following breakdown is a sample estimate and it is conservative.

• Stock – N 20,000,000
• Cash at hand – N 15,000,000
• Furniture Expenses – N 1,500,000
• Generator set – N 5,000,000
• 2 years Rent – N 18,600,000
• Others – N 12,000,000
• Total – N 72,100,000

First Year Sales Projection

Assuming the supermarket is able to achieve daily sales of 6 million and is open everyday of the week with assumed gross profit margin on sales of 14.3%, a first year sales projection could look like this;

Item	Estimate
Gross Sales Gross Profit Operating Expenses Profit before tax Taxation Profit after tax ROI Payback Period	180,000,000 25,800,000 12,600,000 13,200,000 3,960,000 9,240,000 12.5% 7 to 8 years

 

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Paul Onwueme is a professional Business Plan writer since February 2014, has achieved respectable results with his business plan writing service with several of his clients securing funding and leaving positive feedback about his writing service. You can connect with him via phone: 0803 206 4106 or email: paulonwueme@gmail.com