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#KekeNews: For BUA, Business Expansion is a Niche Strategy

September 29, 2016

Kekenapep –

Twenty-eight years after its foray into the Nigerian Business environment, the BUA brand has fully entrenched its footprints in various sectors of the economy, the most recent being the divestment of its flour business to Olam International in a deal worth $275million. Raheem Akingbolu reports

Taking a business from the level of a company to a recognisable brand is always the desire of most business owners. However, experiences over the years have shown that starting a business is easier than building a brand. That is why it is easy to list many companies while statistics of successful brands are minimal. This notwithstanding, a recognisable and loved brand is one of the most valuable assets a company owns.

According to Nielson’s Global New Product Innovation Survey, 59% of consumers prefer to buy new products from brands familiar to them. As a small business, the survey established that one may be competing against big brands with devoted customers. That’s why brand owners always find ways to differentiate–with a solid brand building process of their own.

Like few Nigerian brands that have become household names in the market, BUA Group had entered the market about three decades ago, as a trading company but with the ambition of becoming a solid brand that would command respect in many sectors. From day one, its handlers were able to know early enough that branding was much more than just a cool logo or well-placed advertisement.
Promoters of the BUA Group followed a simple rule of branding; they started small with their branding and didn’t forget to focus on their target niche and audience first. They also craft a clear expression of what their company was most passionate about.
This obviously explains why they entered the market as a trading company, majorly dealing in rice, cement and flour importation. Within a short time, the group turned to a major integrated manufacturer of these products locally and started creating thousands of jobs for Nigerians. Since consumers are always quick to identify with brands they can trust, BUA became a respected brand in many sectors. Today, the brand can be defined by many positive attributes.
Apart from taking BUA from strength-to-strength by contributing enormously to the growth of the Nigerian economy, the management of the company has worked very well in line with government specifications, to promote global practice in the country.

Expansion

BUA Group has over the past few years embarked on a series of strategic acquisitions which has seen its business portfolio expand to include the Cement Company of Northern Nigeria (CCNN), Edo/OBU Cement, BUA Flour Mills, BUA Sugar Refinery, BUA Pasta, BUA Ports and Terminals, and BUA Estates amongst other agribusiness holdings.
As at the time the company entered, trading was quiet different in the country, compared to now. It was very difficult, because access to funding and foreign exchange were both very challenging. However, it was also quite lucrative as not many companies were able to compete. This is where BUA got it right. The fact that it chose to participate early is believed to have assisted the company in starting its manufacturing concerns.
The first of these business initiatives was to set up a flour plant in Lagos, driven by huge demand for flour. At the moment, the company has the flour mills, the pasta plants, a sugar refinery in Lagos and the vegetable oil processing mills and the cement projects that will soon be inaugurated in Port Harcourt. Just recently, the company started production of cement from its three million metric tons per annum cement plant in OBU, Okpella, Edo State.

Medium term strategy

Having established self as a household name, a source close to the group, recently revealed to THISDAY that its strategic focus will now be to diversify to business areas with greater potential for export where the sourcing and utilisation of foreign exchange is less. This is necessary, according to the source, because most of the materials needed for production can be sourced locally, whilst also positioning its current line of foods and infrastructure business for market leadership.
Just recently, the Group announced the divestment of its flour business to Olam International in a deal worth $275m.
The agreement signed with Olam according to the management of BUA, marks a major milestone in the group’s medium-term strategy. Over the years, the group has run one of the largest and most efficient flour milling businesses in Nigeria and the management appears to have confident in the value it will add to the buyer’s operations.

Implementing government policy

Another factor that has helped the growth of the brand is the understanding of the body language of the government and consumers. For instance, as part of strategic plan to effectively implement government policy on backward integration of the manufacturing sector of the Nigerian economy, BUA Group has since embarked on rapid expansion of its sugar plantations in Kwara and Kogi States.
At the moment, extensive work is said to be ongoing in Lafiagi, Kwara State with over 20,000 hectares, while it also has another 50,000 hectares of farmland in Bassa, Kogi. These two operations form the fulcrum of its backward integration programme for sugar and it is believed that this will further reduce the country’s dependence on imported raw sugar while supporting the value chain in sugar production within Nigeria.

Cement Business

Similarly, recent developments have shown that the BUA Group is working towards replicating the successes recorded through the deep integration of its cement operations. With most raw materials for cement currently being sourced locally, the group has been able to scale up operations significantly with minimal dependence on foreign exchange and if information available is anything to go by, it will soon start exporting to neighbouring countries from both the Obu and Sokoto plants which are currently undergoing 3.5million Metric tons Per Annum (MTPA) and 1.5million MTPA capacity expansions respectively to bring the Group’s cement production capacity to around 10 million MTPA by 2018.
If this happens, then it is easy to conclude that BUA Group will be one of the top-five companies in Nigeria within the next few years.

Present business‎ climate in Nigeria

At various fora, the group has consistently emphasised its support for the work being undertaken by government to involve the private sector in ensuring that all legal and regulatory frameworks are effectively in place to boost the real sector of the Nigerian economy.

Nigeria is the most populous country in Africa with around 170 million people. That means a lot of opportunities with adequate resources and a huge market. Apart from investment in the oil sector of the economy, there are other resources in Nigeria that could definitely contribute more to the economy.

Taking the cement industry as a prime example, BUA has always had a lot of limestone reserves in the country; this is evident in the way the industry has grown now that people are investing in that sector.
The various ministries are spending huge sums of money on key infrastructure to attract fresh foreign investment, despite the progress that has been made, energy issues remain a drain on growth.

Nigeria is a challenging environment but the returns are high. A good idea will always be a good idea, no matter where you are. There are so many indigenous and foreign companies operating here in Nigeria and a number of them are highly successful.

Expectation from the government

In a recent statement, the company stated that it was certain that the current government will focus on resolving issues in the power sector to boost the real sector of the Nigerian economy. Like many Nigerians, they admitted that it won’t be easy, but they are optimistic that it is going to work this time. According to the statement, the most important thing has been achieved, which is allowing private investors to come and invest. “Once we solve our power issue, Nigeria will fly” the statement stated.

CSR

Until recently, the campaign by stakeholders had always centered on the need for players in the corporate world to give to societies, where they were operating. While the brand owners in the advanced market were seeing to have fully bought into the concept, organisations in the developing nations didn’t understood why it was necessary, so the campaign was persistent until now when things are changing. The next stage was the call on various organisations to give the appreciative proportion of their investment to the societies, rather than scratching it on the surface. Today, the talk has gone beyond that as experts have started mounting pressure on organisations to look into the area of sustainability

Being Nigerian-owned and very proud of its indigenous roots, BUA is keenly aware of its corporate social responsibility, and therefore frequently giving back to the host communities through donations, sponsorships, various initiatives and projects related to sports and health care through the BUA Foundation.

“At BUA, we have a passion for what we do. We are not only helping to grow the Nigerian economy, but also touching lives, I think what is really important is to do things right, to work hard for your company and for the people around you,” the Chairman, BUA Group, Abdulsamad Rabiu had revealed during a recent stakeholders’ forum in Lagos.



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