Demand for Ice Creams in Nigeria
Think about parties, dates, social hangouts and increasing
year on year demand in major cities in Nigeria especially Abuja which is
Nigeria’s fastest growing city. The main factors which ensure the growth and sustainability
of the business namely; a rising middleclass population, hot weather, growing
western lifestyle and strong use of internet marketing are present in Nigeria.
·
Over
12,000 children’s parties are held weekly all over the country in major cities and
ice creams are staple servings at many of these parties
·
Ice
creams offer a nice dessert option to a sizeable middle class market
·
The high
population of Nigerians who seek outdoor leisure on special occasions such as
public holidays and corporate events also shores up the market size albeit
occasionally
·
Supermarkets
also provide a large market place to distribute preserved ice creams (sold in
buckets or sachets)
\
Market Opportunities for Ice Cream in
Nigeria
There are many uses of ice creams and they range of from ice
cream, milk shake, frozen yoghurt, gelato, frozen custard to ice popsicles
among others within the Nigerian market.
They are generally speaking evolving products within the Nigerian
lifestyle products/services markets. They events and occasions that promote the
large scale consumption of desserts and special treats usually served by
confectionery stores within the parts of cities populated by higher income
earning segment create the opportunity to sell ice creams to an upscale market.
The high income groups which incidentally have high
populations of upper middle class millennials (people born after 1970 and earning
over N200,000 monthly) are the main target market with other potential target
market. The range in population of between 600,000 to 1,500,000 middleclass
population of 20%
Challenges of Ice Cream
Production and Sales in Nigeria
Ice cream production in Nigeria suffers from a large
number of challenges but some of the key challenges affecting the success of
the business are outlined below;
·
Low
Shelf life
·
Poor
power supply
·
High operating
costs
·
Complex
marketing strategy
·
High competition
|
|
1ST
YEAR
|
2ND
YEAR
|
3RD
YEAR
|
|
‘000
|
‘000
|
‘000
|
|
|
Sale Revenue
|
48,000
|
57,600
|
69,120
|
|
Direct Sales Costs
|
19,200
|
23,040
|
27,648
|
|
Gross Profit
|
28,800
|
34,560
|
41,472
|
|
Total Expenses
|
17,073
|
21,758
|
24,282
|
|
Profit before interest& Tax
|
11,727
|
12,802
|
17,190
|
|
Principal Repayment
|
-
|
-
|
-
|
|
Interest
|
-
|
-
|
-
|
|
Taxation
|
3,518
|
3,841
|
5,157
|
|
Net Profit after Interest& Tax
|
8,209
|
8,962
|
12,033
|
|
Dividend
|
2,000
|
2,400
|
4,800
|
|
Retained Earnings
|
6,209
|
6,562
|
7,233
|
|
Net Profit/sales (%)
|
24%
|
22%
|
25%
|
Financial Summary
The
assumptions used in this projection shows a potential average daily sale of
N160,000 and based on a net profit to sales ratio of 24% in the first year
should earn a profit after tax 8.2 million naira which over 21% return on
investment in the first year. The payback period is 4th or 5th
year based on yearly growth in sales and profit of over 20% respectively. Based
on the following startup costs an investment of 38 million would be recouped
completely at least by the 5th year.
Startup Costs
|
S/N Item
|
Cost (
|
||
|
1
|
Personal Computers
|
120,000
|
|
|
2
|
Office Furniture
|
1,000,000
|
|
|
3
|
Equipment and Machines
|
14,715,000
|
|
|
4
|
Packaging
|
220,000
|
|
|
5
|
30 KVA generator set
|
4,000,000
|
|
|
6
|
Renovation and Decorations
|
1,250,000
|
|
|
7
|
Raw materials
|
150,000
|
|
|
8
|
Ice Cream Display Stands
|
800,000
|
|
|
|
Subtotal
|
22,255,000
|
|
|
9
|
Miscellaneous
|
4,020,000
|
|
|
10
|
½ year Salaries
|
4,080,000
|
|
|
11
|
Marketing Budget
|
1,800,000
|
|
|
12
|
Professional/Legal
|
600,000
|
|
|
13
|
Contingency
|
1,500,000
|
|
|
14
|
2 years Operations Costs
|
5,700,000
|
|
|
|
Subtotal
|
16,700,000
|
|
|
|
Grand
total
|
38,955,000
|
|
I am Paul Onwueme and I have been writing
professional business plans since February 2014. If you are looking to write a
professionally sound business plan on ice cream production and sale in Nigeria send
me an email to: paulonwueme@gmail.com
or call me: 0803 206 4106
