The soft beverages industry in Nigeria is bigger than any other market in Africa. The Big Bottling Company is investing in the country to tap into this vast opportunity, where competition is stiff, and challenges abound. In this interview with the company’s CEO Prahlad Gangadharan, we discuss the prospects and future of the company
Big Bottling Company (BBC), a relatively young company in Africa’s largest economy by Gross Domestic Product (GDP), Nigeria has huge ambitions to serve the growing demand for soft drinks in the country.
The continent’s most heavily populated country with 200 million plus people, the firm’s CEO, Prahlad Gangadharan, and the Board of the company have their eyes and goals set on riding the wave, as the country’s economy grows further and its population, which the UN projects will double by 2050 to more than 400 million, become more urbanized and thereby demand more of the company’s menu of products.
Having joined BBC in November 2018, but with vast experience in the country’s beverage industry for over 15 years, Prahlad has his work cut out, a task that he relishes, with pride. “Prior to joining the Big Bottling Company, I was in the FMCG space and I have worked with companies such as Coca-Cola, Cargill and the Shell Petroleum Company,” he informs Food Business Africa on a Zoom call from Lagos, where he is based. “I also have experience in the telecoms sector as well. In short, I am basically a sales and marketing guy with an eye for technology and development. Beverage has been my passion and looking at Africa, the future beholds well, especially for Nigeria that has a large population consisting mainly of young people and there is availability of natural resources.”
Bottling Nigeria’s drinks
BBC is the bottling company for AJE, one of the largest global multinational beverage companies that is based in Lima, Peru, and the brand owner to the BIG Cola franchise of brands.
It is owned by DUET Group, a British private equity company and a principal investor in emerging and frontier markets after the Group acquired a majority stake in AJEAST Nigeria Limited, the sub-Saharan Africa subsidiary of AJE in 2018. With a total investment in the transaction in excess of US$50 million,
DUET is targeting a young demography of growing socio-economic segments, capturing both the significant advance of middle-income households, as well as the demographic dividend of the country’s expansive youth base.
Commenting about the transaction, Henry Gabay, Co-Founder at Duet Group, said: “At Duet we strongly believe in the African consumer growth story. As the number of middle-income households in Nigeria and select West-African markets keeps expanding, and more consumers are entering the formal economy through urbanisation, the demand for products such as BIG Cola will grow exponentially.” Prahlad informs us that after the acquisition by DUET, the company embarked on a restructuring process of its business, from organizing a new team to starting a new bottling line.
The plant is located in Agbara on the outskirts of Lagos, the commercial canter of Nigeria. With Nigeria set to have the world’s third-largest population after India and China by 2050, he believes that the opportunity is still at its infancy, with a huge demand for carbonated soft drinks and water for years to come, in a market that consumed north of 45 billion litres of bottled water in 2019.
In contrast, with a volume of approximately 2 billion liters the carbonated soft drinks segment in Nigeria is modest, but growing from a low base, compared to the rest of the world. The company believes that there is a huge potential for growth in the hotly contested market, that is dominated by large multinationals and number of medium scale local players.
BBC’s product portfolio includes BIG Orange, BIG Lime and Lemon, BIG Tropical, BIG Green Apple and BIG water, with the products available in either 650ml, 525ml or 360ml sizes. “All our portfolio is completely in PET and we do not intend to go into any other packaging format because that is where our expertise lies.”
Doubling capacity for growth
Prahlad says that with an installed capacity of about 3 million cases capacity a month, or 36 million cases a year, that is equivalent to about 18 million litres of liquid per annum, the beverages maker is poised for growth – having recently doubled its capacity by installing a new state-of-the-art bottling line.
“We have a huge population of about 200 million people plus here in Nigeria and that itself is potential – that is why we doubled our capacity. We were confident that we would find the market and it turns out that we were right.”
The new PET line, which was installed by KHS, is one of the more notable investments by the company in recent times. With a capacity of up to 48,000 bottles per hour, the line comes with the InnoPET BloFill stretch blow molder/filler block that forms the heart of the line. The stretch blow molder has been equipped with the AirBack Plus air recovery system, in order to meet BBC’s sustainability targets, that recycles the compressed air used in the stretch blow molding process, reuses some of it and in doing so reduces the amount of compressed air needed – thereby cutting the amount of energy consumed during compressed air generation by up to 36%.
The line’s volumetric Innofill PET DRV filler, with its very short setup times, gives the company the flexibility it needs and ensures extremely high line availability. The line is further supplemented by various packaging and palletizing equipment that includes a labeler, packer and palletizer, among other machinery.
Pivoting during the pandemic
The Covid-19 pandemic has devastated the food industry, including in Nigeria. However, the CEO is full of praise for his team’s resolute determination to succeed, even during the toughest of times.
“2020 was a very tough year for almost everyone across the globe, but for us we are proud that our team was resilient, and we continued production, while still putting up strong precautionary and safety measures while ensuring that our staff were able to survive through the pandemic. We obviously spent quite a sum of money on these measures but on the other hand the payoffs were huge; for example, we launched new products in the middle of the pandemic.
“We also realized that it took small contributions from many people from within and without the company for us to survive the pandemic, right from our salespeople, who helped their customers deposit money in the banks by driving them there and ensuring that the products were delivered on time and in full. We took time to get closer to our customers to help them do business, so that they wouldn’t suffer as much or close down in the middle of the pandemic. That was the secret behind the growth of our business, because obviously if you take care of your staff, who in turn take care of your customers, you will grow as a business.”
He adds that the lessons learnt from the pandemic will go a long way to facilitating the company’s growth into the future. “One of the lessons that we have learnt is that consistently maintaining a high level of quality is the way to survive in this business. Input costs have phenomenally gone up, for example, for some of our main ingredients the prices have doubled. The price of plastics has gone up by 80-90% but we still give our customers the same beverage; we have raised prices by only 20% – a price which they can afford. We have to strike a balance in order to maintain both our customers and investors too. The profit margin is very low during these times, but we have grown in terms of volume because our customers have put their trust in us. We believe that the future is brighter and that is why we have taken this opportunity to put forward strong but risky measures.”
The future of BBC is bright, according to the CEO, and they will seek further growth into the Nigerian market to ride into the unique opportunities in Africa’s largest market, before venturing out into other countries in West Africa. “We are concentrating in Nigeria for now. The demand here is huge and that is what we are aiming to meet. We are looking into expanding and starting new lines in different locations in the country, in order to be able to deliver to our customers faster and more cost effectively. We also have plans of expanding into the neighboring countries in the future, because we often get enquiries from Togo, Ghana and the likes; but first we aim at satisfying the in-house demand in Nigeria.”
On the new products innovations front, BBC had plans before the pandemic struck to roll out more variants of its soft drinks, which were accelerated during the pandemic, despite the inherent risk of failure at the time. “Fortunately for us, since the flavours were of a higher quality and taste better than those of our competitors, they have been accepted easily.” With a well-balanced portfolio of products: carbonated soft drinks, water, value-added water, juices, energy drinks, and malt, the CEO expects the firm to grow into the future along these product categories, where it has its core strengths.
According to Prahlad, competition is intensifying in Nigeria because every major bottler is shifting focus to Africa, where abundant opportunity lies. “We welcome competition because we are very confident that our products are good and also that our service levels on our regular market are tailor made to service the consumers of Nigeria. At the end of the day, there is space for everyone.”
The firm is also seeking new ways to adopt its sustainability initiatives to reduce its impact on society. “We take a lot from nature and the society as well, which gives us the responsibility of giving back to both. We choose the KHS line because it is very energy efficient. We have also shifted from diesel to natural gas, which is a less polluting fuel. As an organization, we are looking at how much green energy we can get, hence we are currently working on commissioning a 1 MW solar plant to service our needs.”
“We will continue offering consumers with better value for money products, we are here to stay, and you should expect more excitement coming the consumer way. We have a lot of stuff and we will put it down to the consumer at the right time.”
This feature appeared in the March/April 2021 issue of Food Business Africa. You can read the magazine HERE