‘Infrastructure, key to manufacturing sector’s growth’
Mrs Folakemi Oshinyemi is the Managing Director, Warm Spring Waters Nigeria Limited, a subsidiary of UAC Nigeria Plc and producer of Gossy Natural Spring Water In this interview with FEMI ADEKOYA, she spoke on the challenges limiting the development of the nation’s real sector and how endorsement from the Nigerian Heart Foundation (NHF) will further boost consumers’ confidence and promote healthy wellbeing among Nigerians.
The ease of doing business, especially in the manufacturing sector has been rated low in Nigeria over the years. What are the challenges you experience as a manufacturer in the packaged water sector?
Nigeria is the only country where you have to be your own government. You have your own road; generate your own power and all of that. But in the Ikogosi community in Ekiti state, it has been challenging with power and because of the topography of that environment, it is also challenging with haulage as there have been no power source for the past one year and consistent power for the last 13 years of our operation in that environment. We have brought consistent power to the community through generated power. Aside from that, we have also provided jobs, trained and empowered the people in the community to work in our factory and other areas since getting ready technical skills could be very challenging. We have also brought good health care management system to the environment.
How has limited access to foreign exchange affected your business?
The components of bottled water packages are all petrochemical products and the fact that our refineries are not working well has limited local raw materials sourcing. We import the materials and it is dollar denominated. The fact that dollar increases, equally affects our cost of production. The labels are expensive; the cost of bottles, wraps has equally increased. In some cases we have 100 per cent price increase ok those materials. This is seriously affecting us so we appeal to the government to help us in that area.
Managing the challenge of multiplicity of regulations and taxation in the real sector has been an ongoing concern. What is your position on it and how can it be addressed?
Government has several regulatory agencies. As a manufacturer, we belong to an association and these issues are being addressed because the charter by which some regulatory agencies are set up sometimes see them replicating or duplicating same procedures and inspection. From NAFDAC to CPC to SON and then NESREA. NESERA is also following us everywhere with environmental and waste management issues. Same thing goes for the taxes. You have paid company income tax, you are paying education tax, environmental premises, and so on. If you continue to load a company with these taxes, how do we pass this cost directly to our customers? The Nigerian environment is seriously harsh for doing business. We want to request that the government should align the taxes, the rates and the levies. In fact, we also have the authorised levy collectors because we haul our water to different parts of the country and as we are hauling, we pay from state to state and local government. All these costs hike the cost of haulage. That is why Gossy is different because all the others have different factories where they can produce bottled water. You can only get spring water from the natural environment.
Can you describe how you manage your quality process considering the distortion that may come with packaged water production?
Quality management system starts from the time you buy caps for the bottle. In UAC Nigeria, we have a procedure in quality management which NAFDAC is also aware of. In the system it is not only when you add chemical to things that it becomes safe for consumption. This is water that flows from the rock. What we have done is to draw the water from Ikogosi warm spring and as it is coming from the rock it goes through layers of filtration. When we pass it into our tanks which are world class stainless and filtration system, it has no human intervention. But we have a procedure and process which we call cleaning in place. That’s done every day before we do production and we don’t use chemicals for that. We clean the lines using water itself. All we do is to filter the water and what that does is to remove rock particles that may have followed the water from the source.
How are you managing competition in terms of pricing?
Our recommended retail price is N50 but the retailers sell at N70- 100. The fast food organisation has some sort of price regulations. But the way we are looking at competition is that once your quality is right, people will buy. We are looking at quality and what we offer to the populace. Everybody bottles water but the quality of our water is different. We also communicate and educate people on the natural minerals constituents and the environment in which water is being produced and packaged. There is pollutant all around and chemical in almost everything you eat in Nigeria but when you eat that and take quality water, it helps to detoxify your system so that you live a healthy life so it is on that platform that Gossy water is differentiated. The level of satisfying your thirst is the level of priority but the level of the quality of the water and natural minerals it offers are our priority.
How has the endorsement from the Nigeria Heart Foundation helped in differentiating your products from others in the market considering the competitive nature of the market?
Water market is competitive however, the differentiating fact is that Gossy Natural Spring Water contains natural minerals which are not found in ordinary borehole water which is being sold everywhere and that is why we always say that Gossy is a premium brand. It is spring water, which is priced higher than any other water even abroad. The challenge in Nigeria borders on the level of awareness, lack of awareness and the fact that people just feel that whatever I drink, water is water. However, we encourage people to drink spring water because it contains natural minerals and we have not disturbed it; we have not treated it with any chemical or added anything to it. So there is no chemical in the water at all. It is just what nature has endowed us with.
Are you considering innovative packages, in terms of size?
We are not looking at that option at the moment because of the nature of the brand, as we are pushing quality product.
You cannot get natural spring water from the city; you must go to the villages. In this regard, as an alternative for producing the 18 litre bottle for home use, we have 1.5 litre for home use. We had considered that innovation but it comes with challenges. We would need to sanitise the bottles, but in our own procedures and processes, we don’t use chemical at all. So in trying to avoid introducing chemical components into our water we are not able to offer the 18 litre option because when you return the bottles, one would need to sanitise them with chemical, but in our case the bottle is customized for you.
How would you describe your performance in the operating environment in terms of market share size?
The Bureau of Statistics does not have reliable data on the market share for packaged bottled water but for Gossy, we are not doing badly in terms of the market share. Let’s take a look at from premise based bottle water because there are a lot of bottled water products that are not premise based. They are not registered with NAFDAC, they are not the big names you know so I am only talking about those firms that are registered and are working by regulations. In that category, we have a good sizable number of that percentage and Gossy stands at about 17 per cent of 43 per cent. However this is unsubstantiated market report.
What is your opinion on the new electricity tariff?
How do you pay tariff for power you have not used? As I speak to you, for over one year, we have been generating our power. Prior to that time, the distribution companies increased their tariff thrice and it was increasing our cost of operation without commensurate power supply. The tariff, I will say, is an anomaly because you are increasing tariff and the services are not being rendered. In a manufacturing environment there is a level of kilowatts that is required for your operations.
You supply candle light type of electricity which is not useful to us, as such we have to result to the power generating set. Aside from that, the federal government should ensure that the Discos and Gencos are effectively supported. If there is good quality of electricity, manufacturers will tap into it.