CASE STUDY-YAM EXPORT
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- Aldous Ferguson
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1 CASE STUDY-YAM EXPORT This is a presentation by followed by a discussion of the issues raised Project Description: To ensure penetration of UK an Irish market for Nigerian Yam Partners: FPro Development Solutions UK and Nasarawa Governor s Office NEPC and Nigerian private sector in Nigeria Coventry University and Browns Distribution in UK Project Dates: Commenced 2003 stage 1 completion
2 Product Yam - Dioscorea A tuber with very high starch levels, grown largely in West Africa. The yam season is 7-8 months starting August/September Yams have cultural as well as nutritional significance in Nigeria However, the quality of the grown product is declining due to overfarming allowing the pathogens to live on in the soil Also the natural yam does not store well due to its high moisture content This means that fresh yam commands a better price than stale yam It also means that long-term storage depends on processing the yam (pounding/drying etc) Product Demand-Side Yam is consumed in UK/Eire almost entirely by the African and Afro- Caribbean population UK yam market is currently supplied by Brazil and Ghana and amounts to some 5-10 containers per week Brazilian product is considered superior to Nigerian and Ghanaian. It is better packaged cleaner and with lower wastage. Yam is currently sold almost exclusively through wholesale traders to small retail outlets: the supermarkets have not embraced the product 2
3 Market Research - Total Market UK grocery retail market = 124BN, Eire 20BN Exotic veg share <5% but growing; yam <2% of exotic veg Market Research - Segments Nigerian/African Diaspora Largely London, Leicester, Birmingham, Liverpool Wholesale markets Accounts for 25% of fresh fruit and veg sales in UK/Eire Largely Asian run and owned Weekly price volatile (reported in FPJ) Supermarket Retailers Exotics < 10% of fresh spend, yam = 0 (nearly) Fair Trade and Organic Unclear whether Fair Trade or Organic price premium covers additional cost 3
4 Market Research Market Shares Market Research - Trends Market: Britain's fruit and vegetable market was valued at 7.6 billion in 2003 by market analysts Keynote, but has grown by just 3.9 per cent since 1999 Pricing: Retail pricing on seasonal foods has grown consistently slightly below inflation rate currently 9% in the last 10 yrs as opposed to 27% inflation. This is due to increased competition. High pricing is therefore only possible for specialised or premium products and added-value convenience products. Products: Organics are growing at 14% in Germany, which added to UK represents 50% of the European market. Spain has the lowest penetration at 1%, Scandinavia around 6% 4
5 Market Research - Competitors Nigeria s key yam competitors are other exporters of exotic products. For example: Ghana and Brazil Although the market is expanding, the consequence of a penetration strategy will be to provoke reaction from the existing suppliers, leading to reduced prices and margins Market Research - Customers - Consumers The consumer targets are: The Nigerian Diaspora and other Africans The more adventurous indigenous UK and European shoppers Specialist restaurants and caterers Suppliers of pickles and prepared ethnic foods. 5
6 Market Research - Customers - Wholesale Wholesale markets - key issues are: Perceptions of quality and reliability Price sensitivity Seasonality Geographical distribution Packaging requirements, including pack sizes and durability Supplier and brand loyalty and awareness. Fair trade, political, cultural and ecological issues. Marketing Strategy Objectives Nigerian Diaspora Aim to penetrate this market segment to obtain a 20-25% share in the first year, rising to market dominance in the second and third years. Wholesale Offers the softest entry to Nigerian produce, in terms of mixed and irregular shipments of produce, although competitive pricing may be required as an incentive to positive buying decisions. A market share of between 5 and 10% in selected product ranges is acceptable in the first year. Supermarket To succeed in the supermarket/pre-packer segment will take longer than the others A target market share of 2% over two years is acceptable 6
7 Marketing Plan Product: White yam high quality, well packaged to compete with Brazil product. Packaging in strong well marked cartons, individually wrapped tubers Price: Aim for per box wholesale Place: Initially direct distribution to London retailers to establish Grow Africa brand. Sales to wholesale in parallel. Supermarkets targeted only when quality and reliability is proven Promotion: Web- based, also use Ben TV contacts and direct sales representation Project Results Initial demand created on-line and by personal selling UK distribution well planned and executed Some success in export shipment, but not at high quality required Quality variable, due to poor post-harvest QCA, over-loading, inferior cartons (initially) and poor container management Results are sufficiently encouraging to proceed to step 2 7
8 Samples Samples 8
9 Further Development Yam grading, sorting, treatment and storage centre (PPP) Curing facility at 40 o C Temperature controlled storage at o C Clean conditions for washing, sorting and packing will reduce outgraded product Integrated animal feed mill for sub-standard product Centralised marketing facility (PPP with NEPC/Private investor) Allows diversification into other products Further Development - Floor Plan & Flow Chart 9
10 Discussion of the issues raised 10
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