PROJECT PROFILE

AACE

Agroprocessing of locally sourced fruits and vegetables

March 2012

AACE Foods is a Nigerian start-up company with a strong vision of delivering social and development benefits to Nigerian small-scale farmers and food producers. AACE currently processes, packages and distributes foods products such as jams, spreads and spices for commercial and retail customers in Nigeria.

The business of business: what are the commercial drivers? Optimizing quality control and security of supply are the main commercial drivers for AACE, achieved by building sustainable robust systems for sourcing from local suppliers.

over three years approx 1,000 farmers will be involved in the supply chain (either directly or through farming cooperatives and rural microfinance associations).

It is estimated, that

The proposed inclusive business initiative Operations started in May 2010. AACE buys its raw material from the wholesale market in Lagos which results in lack of quality control, inconsistent supply volumes, lack of traceability, and an indirect and unclear benefit to small holder farmers. Given these challenges, one option for companies is simply to import raw materials and/or processed food products from other countries. However, this is not in line with AACEs vision. AACE therefore aims to develop a value chain for locally sourced, processed and distributed foods for business-tobusiness and business-to-consumer sales. The company seeks thereby to demonstrate the commercial viability of sourcing raw materials locally and creating an innovative supply chain with positive developmental benefits for various stakeholders along the value chain such as direct employees as well as suppliers (small holder farmers and cooperative groups), distributors (SMEs/retailers) and consumers.

Additional returns will come from being an integrated and inclusive business in the Nigerian food processing and branded foods market. The emphasis on local sourcing, processing, and distribution, combined with local sales at prices affordable for the mass market,

PROJECT DETAILS
Country Company Sector Commercial Partners Business Model Focus Revenue Model BIF Contact AACE Food Processing & Distribution LTD. contact Nigeria AACE Food Processing & Distribution LTD Agriculture & Food Oando Marketing PLC, Alitheia Capital Limited Inclusive supply chains, farmers as suppliers & clients Developing and implementing a sustainable supply and distribution chain strategy Soji Apampa, nigeria@businessinnovationfacility.org Ndidi Nwuneli, nnwuneli@aacefoods.com

The Business Innovation Facility (BIF) is a pilot project funded by the UK Department for International Development (DFID). It is managed for DFID by PricewaterhouseCoopers LLP in alliance with the International Business Leaders Forum and Accenture Development Partnerships. It works in collaboration with Imani Development, Intellecap, Renaissance Consultants Ltd, The Convention on Business Integrity and Challenges Worldwide. The views presented in this publication are those of the author(s) and do not necessarily represent the views of BIF, its managers, funders or project partners and does not constitute professional advice.

For further information and to join the discussion on inclusive business, go to:
Practitioner Hub on Inclusive Business: www.businessinnovationfacility.org

Agroprocessing of locally sourced fruits and vegetables

AACE

provides AACE opportunities for competitive differentiation in a Nigerian retail sector that is currently dominated by imported food products and raw materials. Branding with Produced in Nigeria will help build customer loyalty. A further driver is the potential to stimulate demand for other related products offered by the business. The business of business: what are the commercial drivers? An inclusive business: how does the business support development? By developing a supply chain that directly sources produce from smallholder farmers and cooperative groups in rural communities across Nigeria, and processing and distributing products in and for the Nigerian market, AACE will generate multiple income-earning opportunities: Jobs in AACE AACE is likely to directly employ at least 65 full-time employees over the next five years. Improved opportunities and security for 1000 farmers the current agricultural supply system is not only inefficient for AACE but results in insecurity and loss of income for farmers. Farmers sell their products to the wholesale market through middlemen. They are unable to efficiently match their harvest with sufficient buyers, face logistical challenges which prevent the efficient distribution of products, so the net result is unpredictability and lack of security. A considerable proportion of produce may simply rot, without being sold or during transport to market. AACE inclusive business model will enable farmers to obtain predictability of sales and incremental income from AACE purchases. Partnership with local NGOs is intended to help build farmer capacity and productivity. It is estimated, that over three years approx 1,000 farmers will be involved in the supply chain (either directly or through farming cooperatives and rural microfinance associations). Opportunities for micro-entrepreneurs AACE will work via local representatives to sort and grade produce, and through thirdparty transporters to convey the produce to its factory in Lagos State. AACE will also engage distributors for its finished products, printers and packaging manufacturers. There

will thus be growing scope for microentrepreneurs and small enterprises to engage in the expanding value chain. In addition to these gains for producers, there is potential for a positive impact on nutrition through the introduction of nutritious foods for children and on the environment. AACE already uses re-used glass jars, and offers its commercial clients, rebates for returning plastic containers for re-use. It aims to develop environmental best practices in its manufacturing operations, minimizing waste, using low-energy devices, and recycling water it is using. Support from the Business Innovation Facility In order to build an integrated value chain for fruits and vegetables, support from the Business Innovation Facility will focus on three key areas: Access to technical expertise in the area of food production and innovations in food processing to design and implement an efficient production system. Assistance in developing a robust supply chain strategy for local sourcing - i.e. identifying clusters of small holder farmers, assessing the existing production capacity, and developing a strategy for reliable smallholder production capacity and sales. Support to design and launch a marketing and branding strategy in order to effectively introduce its products to the consumer mass market. This type of support is needed as local consumers tend to show some resistance/concerns about buying Nigerian products instead of imported ones. Pursuing innovation and scale in inclusive business AACEs inclusive business model can be considered innovative within the Nigerian context in two key areas. Firstly, the company plans to demonstrate the viability of sourcing raw materials locally and creating new supply and distribution chains. Secondly, AACE will offer innovative products at affordable prices to the mass market, thus reducing dependency of retailers and consumers on foreign imports of jams, spices, spreads and complementary food for babies and toddlers.