Cold room business is fast becoming a popular side hustle in Nigeria. There is hardly any household today in the country that does not feed on frozen foods such as yoghurt, ice cream, ice block, soya milk, frozen fish or poultry products. Many business-minded individuals are now taking advantage of this huge demand to start cold room businesses in order to make quick money.
Mama Ngozi owns a fairly large cold room business in Ogba. she has been in the business for about 5 years now. According to her, the business is a silent one, where you can make millions of Naira quite easily. Erratic and inadequate power supply in homes and food industry has increased the demand for frozen foods in the country.
How to start cold room business in Nigeria
Decide your scale:
The first step is deciding whether to start on a small scale or on a large scale and this largely depends on the capital available to kick-start the business. The small-scale cold room business would only entail selling to immediate customers. For people who want to engage in small-scale cold room business, all you need is a good shop, refrigerators or a mini-cold room, constant power supply and of course, access to a cheap supply of products.
The success of your business depends largely on the location of the cold room. According to Mama Ngozi, it must be located in a busy environment— most preferably close to a market. Once the cold room is strategically located, definitely people will patronize it. You can also look for a very good warehouse to use. The place must be spacious and well ventilated in order to guarantee the adequate preservation of your products.
An important step for any serious operator (large scale) of a cold room is to register with the regulatory agency, the National Agency for Food Drugs Administration and Control (NAFDAC). Officials from NAFDAC will visit the premises and give a pass mark on the hygiene of the environment since you will be storing consumable goods. It is therefore advisable to get the necessary government license and get your premises registered.
Access to products:
If you plan to deal in chicken, turkey, meat, and fish, you can set up a farm where you can raise livestock birds or get supplies from owners of big poultry farms, then process and package the goods by yourself before selling. You can make more profit with these arrangements.
Equipment needed to operate a cold room
For a small-scale cold room business, the main pieces of equipment are:
- One or two deep freezers: A double door chest freezer currently costs between N120,000-N150,000 depending on the brand and capacity.
- A stabilizer currently costs between N12, 000-N25, 000 this also depends on the capacity.
- A generating set— 6KVA generator goes for N120,000-N170,000.
For those that want to start on a large scale:
- Buying or constructing a cold room— Currently, prices of cold rooms vary with the number of features such as cold room dimension, the thickness of polystyrene body panels, roof panels, floor panels and door type sliding or hinged door. Prices of cold rooms may also vary with its cooling capacity. It ranges from N2.6million-N40million.
- A cooling van for transportation of perishable goods— a fairly used cooling van costs between 7million- 4million.
- A 30 KVA generating set which costs between N3,700,000-N4,000,000.
There are cold rooms of different capacities (3tons to 500tons) available in the market. They are either imported or locally built in Nigeria. The imported cold rooms are very expensive, but the locally fabricated cold rooms are affordable and cheap to maintain; this will reduce the capital needed.
Because of the peculiarity of this business, an operator must ensure constant power supply to prevent the products from damage. And to ensure steady power supply, you need a standby generator as an alternative to the public power supply; this is to ensure the continuous functioning of your cold room.
Also, to get new customers, retain old ones and possibly gain an advantage over existing competitors, you will need to purchase one or two cooling vans to aid the quick transportation of frozen foods to various destinations without them getting worse.
Other tools include
- Cutting knives
- Packaging supplies
- Measuring scales, tables.
- Polythene bags or cartons.
- Bowls and safety equipment.
Also, hire some hands to manage the cold room business to ensure a high profit. You will need services of a manager, sales boys, loaders, driver, and security men.
The capital required to start a cold room business in Nigeria depends largely on the scale of operation you want to set up. You could choose to start a small-scale cold room business with N500,000 and above or a large-scale cold room with N15million and above; these exclude rent fees for the warehouse or shop space.
According to Mama Ngozi, the greatest challenge faced in the business is the shortage of electricity. This is why getting a standard generator that can carry the cold room is mandatory and this will always gulp very high voltage. However, she was not ready to disclose her daily income from the business, but she maintained that business is good.
“I don’t want to start mentioning them [the benefits] to the entire public but I must say the business is profitable and I have really achieved a lot from it and I really thank God.”
Another one is transportation because the goods can be on the way for days, even weeks and there might be an accident or break down of the vehicle along the way.