Entrepreneurship Zone: 15 June 2023 :: Uganda: Businessman turns banana crisps into sizeable snack food company

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Entrepreneurship Zone: 15 June 2023 ::  Uganda: Businessman turns banana
crisps into sizeable snack food company

 

	
 


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 <https://www.hyundai.co.zw/>  


In 2010, Dennis Ngabirano, a teacher by profession, was required to submit
and execute a business plan as part of his coursework for a counselling
degree in his home country, Uganda. A fried banana crisp snack, which he had
sampled on his honeymoon, inspired the idea for a snacks business. He
pitched this to the lecturer with a budget of just US$12. Today, 12 years
later, Psalms Food Industries produces various products, including potato
and banana crisps, processed nuts and seeds, cookies, and nut butters. 


Starting as a side hustle


Dennis Ngabirano became a teacher because his father, himself an educator,
suggested it would be a good profession. From day one, however, he was
looking for ways to augment his salary or find another means of earning a
living. The first attempts weren’t long-term successes: a unisex hair salon
survived only two years and the small grocery store he opened enjoyed a
similar tenure.

A street snack from a vendor in Mombasa in Kenya, where he took his wife
for their honeymoon, changed everything. When he ate the fried banana
crisps, he realised the idea could be transplanted to his home country on a
larger scale. Ngabirano saw an opportunity that required very little
start-up capital.

They set up shop on the veranda of their modest home. Their first product,
the banana (or gonja plantain) chips, was a hit with neighbours, students at
the university where he was completing his degree, as well as the learners
in the school where he taught. Ngabirano and his wife, Maureen, packaged
them and sold them under the brand name Mr Tasty.

As the business grew, a friend urged him to register the name, but when he
finally got around to it, it had already been taken and he settled on Psalms
Food Industries, with the brand name Sumz (a homophone for Psalms).

Maureen, also a teacher, eventually resigned from her position to manage
the business. Growth was steady, but slow. It was only when Ngabirano
dedicated himself to Psalms Food Industries for a full six months while on
study leave from his teaching position that the company saw real growth
momentum. It gave him the courage to quit and rely on Psalms as his only
income stream.


Finding customers and retaining them


Psalms was selling its snacks, still manufactured on the veranda, to
university canteens and learners at the school.

“That school had close to 3,000 pupils. The market was available, and
everyone was excited about the banana crisps,” he says. “I also started
getting referrals from the school parents who had their own retail shops and
supermarkets.”

Every new customer was one Ngabirano intended to keep; he believes customer
service is key. “Psalms strongly believes there must be retention of all
customers if you want to grow; our customers are the reason we exist.”

>From day one he instructed every new staff member to take heed of the
slogan: “If you don’t take care of our customers, someone else will.”
Customer concerns had to be addressed in the shortest time possible, no
matter what the costs involved were.

“I teach staff how to speak to customers. I show them how you can
cross-sell different products to a good customer who might purchase just one
type of snack. This is how you grow without spending too much time and money
on advertising. As a company, we also believe loyal customers, who have been
treated well, will stand by you through bad times,” he says.



Employees at the Psalms Food Industries factory.


Ramping up production


In 2014, when Psalms was outgrowing its home-based manufacturing space,
Ngabirano was approached by an Indian businessman who had established a
potato crisps business but had reached a point where he wanted to divest and
sell all his equipment.

“He was operating within Kampala, renting a warehouse where his
high-quality, imported equipment was housed. He was unable to break even and
wondered whether I’d be interested in buying the equipment,” reveals
Ngabirano.

Psalms did not have the capital to buy everything up front, but Ngabirano
made a deal to pay 50% immediately and the rest within six months, using the
equipment as collateral to get a loan from the bank.

The company also moved into new premises. “Immediately, using the new
equipment, the quality of the crisps improved. We were producing more
efficiently as well and could compete with the imported brands.”


Diverse range of products


Sumz products are diverse, with 20 different SKUs in the market currently.
It processes 20 tonnes of bananas each month and 50 tonnes of potatoes.

On its online sales portal, one will find gonja crisps, flavoured potato
crisps, corn crax (a maize snack), roasted and salted simsim (sesame seeds),
crunchy bagia (made from maize flour, sugar, and salt), cookies, fried peas
and fried chana dal, among other products.

“I look at each product the way you would look at children in your family;
they may have different abilities but they are all equal.” Potato crisps,
for example, have a significant potential market, but the competition from
domestic and imported brands is fierce. Banana crisps could gain market
share in the region as there are few large scale manufacturers but it is the
one product that cannot be mechanised.

“You need to analyse each product independently.”


Exports


In 2018, Psalms Food Industries sealed its first export deal with a
distributor from Rwanda. Then in 2021, Sweet Brands Africa, from Kenya,
reached out to buy the sweet plantain crisps and has since taken Sumz
products to the Democratic Republic of Congo and South Sudan.



Psalms Food Industries produces a range of snack food products.


New competition every day


“Export opportunities are definitely growing and we want to capitalise on
this. It is, however, important to consider the logistics challenges of
exporting from Uganda. It can become capital intensive; we need trucks,
motorcycles and storage facilities. You must be careful not to get trapped
in inefficiencies,” he says. The company currently handles logistics
in-house with a fleet of 19 trucks and motorcycles.

One of the negative trends Psalms has to overcome is copycat producers.
“Someone has attempted to replicate the brand with low-quality products in
the market,” he says.

There is also competition from large importers and supermarket chain
Carrefour, for example, has started supplying imported crisps under its own
brand.

Competition for raw materials has also increased. “High-quality potatoes
are scarce now. We also face an issue with competition for the supply of
plantains,” notes Ngabirano.


Looking ahead


Psalms is ready to increase sales into the East African Community and has
applied for a loan from the Uganda Development Bank to set up a new plant.

“We have five acres of land for this new factory, with an approved building
plan. We are going to set up the largest crisps factory in East Africa. It
is going to be 12,000m2 and we aim to have it ready within 18 months. We are
in an advanced stage of approval for the funds to help us to accomplish our
dream. We applied for $3 million and they’ve assured us they will release
the money at an annual interest rate of 12%.”

The new factory will help to drive product prices down, making the snacks
more affordable in the region. “This will push demand up. The world-class
facility will be able to produce quality crisps, comparable to Lay’s. We
will be very competitive and can tap into all the available markets in the
region and beyond,” says Ngabirano.



Dennis Ngabirano

 

 

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