Dala Foods Nigeria Limited: Developing soluble juice drinks for the BoP

Dala Foods aims to market an instant, powdered version of a nutritious indigenous drink popular amongst low-income consumers in Nigeria. This soluble alternative aims to reduce the health hazards associate with existing production methods, while also creating a new market for Dala products at the base of the pyramid in Nigeria.

 

The inclusive business initiative

Nigerian food processing company, Dala Foods Nigeria Limited, specialises in processing grains into affordable instant food drinks for the Nigerian market. In this venture, Dala aims to expand its production to include Zobo, a juice drink which is made from the hibiscus plant, and consumed by low-income people as a staple food. These drinks are traditionally packaged in recycled, unbranded bottles that are poorly sterilised, and methods of storage and distribution are often unhygienic, resulting in contamination and other health hazards.

Dala plans to introduce a soluble, powdered version Zobo, packaged in small sachets targeted at low-income earners. The company aims to take these drinks beyond the bounds of Northern Nigeria, where they are most popular, to the rest of the country where they are also known.

Commercial drivers

The popularity of Zobo and other instant food drinks at the base of the
pyramid means there is a large market for sachets of the powdered drink. The long-term strategic drivers behind this venture include gaining an increased market share, and leveraging the company’s present business operations and competencies by increasing production and widening potential for expansion. Through this project, Dala intends to introduce a new product into its product portfolio, the instant Zobo drink. The addition of more product lines such as Zobo will help boost sales.

Dala’s production methods and product design aim to achieve lean production and acceptable price points. Zobo is accepted across Nigeria because of its taste and nutritional value: it is believed to help cure ailments such as diarrhoea and pneumonia. Introducing instant Zobo will open up a wide market for Dala’s other products and brands as they expand into domestic markets.

Development impacts

This venture has development potential in a number of areas. Firstly, it aims to engage smallholder farmers into the value chain as suppliers. As a result of the new product lines, Dala also anticipates the engagement of low-income people as distributors of the products in markets, bazaars, corner shops and through roadside sales. Thirdly, the project aims to improve the lives of consumers at the base of the pyramid, by making highly nutritious, local food drinks more affordable, accessible, easier to prepare and safer to consume. Finally, the project has the potential to stimulate local economic growth through job creation on-site. Dala estimates that about 500 people will be directly impacted as employees and distributors in this project within the first year of implementation.

The new product introduced into the market by this venture aims to provide low-income people with access to their favourite drinks, without the health hazards they would otherwise risk, without the cumbersome production process, and all at an affordable price. Dala’s objective is to employ poor people as factory workers and distributors.

Innovation and scale

The provision of quick, hygienic and efficient ways of processing and production local drinks popular with local people is an innovative component of the project. Innovation is core to the product development; packaging local drinks in sachets and formalising distribution is a new feature in this market. Creating the instant Zobo juice drink also requires new technology, beyond the scope of traditional driers currently used in production.

Objectives of Facility engagement

Support from the Business Innovation Facility is primarily aimed at improving the supply and distribution efficiencies through a detailed analysis of Dala’s value chain; developing a business plan, implementation plan and investors memorandum; and identifying investors interested in the FMCG industry in Nigeria.