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Tuesday, January 19, 2021

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


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