Nigeria’s leading FMCG company shares story behind its record growth amid COVID-19 pandemic
Despite the impact of COVID-19 on the economy, Honeywell Flour Mills Plc recorded some of the best growth in its history in the last year. Its revenue grew by over 36%, from ₦80.45 billion in 2019 to ₦109.59 billion in 2020. Its profit after tax also increased by 73.1%.
Lanre Jaiyeola, the Managing Director of Honeywell Flour Mills, Plc., has said that this remarkable growth is down to the sheer grit and doggedness of the company’s workforce. He also credited collaborative effort, improved production and cost optimisation, and guidance provided by a clear strategy and common purpose.
Honeywell Flour Mills also managed to keep down its selling and distribution expenses. This resulted in a 39.1% increase in the company’s operating profit.
Given the peculiar circumstances that surrounded the pandemic, Honeywell Flour Mills had to increase production to match market demand. This led to the company achieving high single-digit sales volume growth.
According to Jaiyeola, the consumer foods category was a significant contributor to the increased volume growth, up 26% from the previous year. Pasta was a major driver in this category, growing 40% from the previous year and heavily influenced by the increased production capacity from the company’s Sagamu factory. Although barely two years old, this factory contributed more than 17% to total revenue. Its ball food category (Semolina and wheat meal) also contributed double-digit growth at over 20%.
By focusing on staple foods, Honeywell displayed its understanding of market dynamics and ability to rise to any occasion. The pandemic came with movement restrictions and led to consumer behaviour changes. During the lockdown, for example, people needed to invest more in foods with longer shelf life. Honeywell’s Pasta, Noodles, Wheat meal and Semolina perfectly meet this criterion. Its other products such as Bread Flour, also meet the requirements. This way, the company was already well-positioned to meet people’s needs and ramp up production to meet the demand.
Honeywell Flour Mills also showed an understanding of how price sensitive the market is. However, the increase in the cost of raw materials, wheat, and packaging materials warranted a proportional increase in the price of some products. In addition to all these, the pandemic also impacted global trade and the world economy. Nevertheless, the rise in the price of wheat-based products was even less than the increase in the price of carbohydrates like yam, rice, cassava and other staple foods that Nigerians love. This means that flour milling companies like Honeywell did not entirely pass on the cost of production to consumers.
Finally, Honeywell Flour Mills’ focus on the capacity, strength and welfare of its workforce impacted its record growth. The company increased staff strength by 1.6% and took on an additional 12% in employee costs. Again, this is typified by the growth of its Sagamu plant, which now directly employs about 450 people with 1,000 more indirectly engaged in and around the community
