Entrepreneurship Zone: 02 November 2023 :: Feeding the Nigerian diaspora in America: A prime agribusiness opportunity

Thu Nov 2 09:38:19 CAT 2023

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Entrepreneurship Zone: 02 November  2023 ::  Feeding the Nigerian diaspora in America: A prime agribusiness opportunity

Jeanette Clark interviews Affiong Williams, CEO of ReelFruit, about the prospects for Nigerian food companies to tap into the Nigerian diaspora living in the US.

The US is the world’s biggest consumer market, estimated at $16 trillion. On the other hand, Nigeria, despite being home to over 220 million people and one of Africa’s largest consumer hubs, is projected to achieve a market value of only $3 trillion by 2030. This disparity highlights why, for many businesses in Nigeria’s food and agriculture sector, the US could be an enticing target.

Affiong Williams, the CEO of ReelFruit – a Nigeria-based dried fruit snacks producer – sees the substantial Nigerian diaspora in America as a golden opportunity for companies like hers to establish a presence in the US. “There is no better market, or no lower hanging fruit, than your people in another country,” she says. “I see a growing opportunity for products such as mine and other food products that are becoming more global in their standards, to sell to the Nigerian market in the US.”

It is estimated that as many as 5 million Nigerians live abroad, with a significant chunk of these people residing in the US.

While the Nigerian diaspora in the US might feel a connection to their homeland, it doesn’t guarantee they’ll choose a ReelFruit packet out of nostalgia. Williams understands that to succeed, her product must also appeal to the broader US audience, not just those with Nigerian roots. “Many foods exported from Nigeria to the US are for Nigerians in the diaspora, however, if people could produce food and snacks with wider appeal it could be a big opportunity,” she notes.

ReelFruit previously sold to the US through its online store and on Amazon but Affiong notes that the company has since pulled back to re-strategise the most cost-effective approach to reach US consumers. It is, however, collaborating with a US-based distributor to place its dried fruit, flakes, and nut mixes on the shelves of traditional African stores across various American cities. Recently, it also brought on board a broker who has successfully secured new deals, one of which includes a partnership with a US e-commerce platform.

The company benefits from the Africa Growth and Opportunity Act (AGOA), which allows duty-free access to the US for qualifying sub-Saharan countries. This gives Nigerian manufacturers, like ReelFruit, a valuable advantage when entering the US market.

Going global amid local economic challenges

According to Williams, it is the ideal time for Nigerian food and agriculture companies to go global, given Nigeria’s current economic challenges

Nigeria is grappling with several economic headwinds due to a strong US dollar, worldwide inflation, and domestic policy shifts. Recently, the naira reached a record low of 1,000 to the dollar in the black market. Further intensifying consumer concerns, Nigeria’s annual inflation rate surged to 26.72% in September, its highest in 18 years.

“Many Nigerian companies have input costs in dollars either directly or indirectly. So, the inflationary impact of the devaluing naira is hedged when you [export and] earn dollars,” says Williams. She also mentions that a weak naira makes ReelFruit’s products more competitive on American shelves.

Given the strain of domestic inflation on the spending power of Nigerians, Williams underscores the importance of targeting markets with greater disposable incomes. Even capturing a modest portion of a dollar-paying market can assist businesses in navigating Nigeria’s tough economic climate.

The importance of local partnerships in the US

For food products, there’s a common belief that exporting to the US requires extensive certifications. Williams, however, counters this view, explaining that the need for certifications depends on the buyer. If the buyer doesn’t ask for them, they aren’t necessary, making the export process more straightforward.

ReelFruit does not yet have a dedicated US office or distribution centre, which has lead to challenges with last-mile delivery for products purchased from its online store and shipped from Nigeria. Handling merchandising and advertising becomes more complex when not physically present in the target market. Williams highlights that these operational aspects, more so than certifications, present the main challenges in navigating the competitive US market.

For example, US buyers prefer immediate access and local availability, and are often reluctant to purchase directly from international markets. To cater to this preference, companies can establish local partnerships, such as teaming up with distributors or finding warehousing and logistics partners.

Williams recognises the challenge of pinpointing the right partners and recommends casting a wide net when building networks and relationships. “It is hard to know where you will strike gold. I have been to several trade fairs, and I never got a buyer [from these]. Relationships help because people who know buyers will introduce them to you. This is usually where you have the highest strike rate.”

Co-packing: An alternative strategy for US entry

Currently, ReelFruit isn’t pursuing placement of its products on the shelves of major US retailers. Securing shelf space is one challenge, but a substantial investment is also essential to ensure consumers actually pick them up and buy.

“It is very expensive. Once you try to compete at a brand level, we are talking at the minimum 25% of your revenue [having to be spent] in advertising,” says Williams.

Venturing down this path might mean operating at a loss for approximately two years before potentially turning a profit, and that’s contingent upon the product being successful and well-received. Williams suggests alternative strategies, where the company doesn’t bear the brunt of the marketing risk yet can achieve significant sales, like co-packing, where a company produces and packages products on behalf of its clients.

ReelFruit’s current objective, says Williams, is to become a renowned partner for co-packing with US brands. It is currently negotiating one such deal. The aim is to be recognised as the go-to company for various types of tropical dried food, customised to meet the preferences of US customers.

In pursuit of this vision, ReelFruit has been upgrading its production capabilities, bolstered by a successful Series A funding round in 2021 that secured $3 million. Should this strategy prove effective, the company might consider bringing packaging in-house, a process it currently outsources. Achieving this would mean that both the processing of the fruit as well as packaging would be handled entirely in Nigeria before the products make their way to the US.

Affiong Williams

Interview with Affiong Williams
FOUNDER AND CEO, REELFRUIT

-Howwemadeitinafrica

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