Can this little known FMCG player ever compete with the big names?

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About McNichols Plc

Happy New Year and welcome back to Nairametrics’ company focus. It’s early January 2019, and as always, the business environment is trying to pick up from where it left off last year. Here at Nairametrics, we are ready to keep pace with the latest developments whilst keeping you informed. In the meantime, we shall be focusing on McNichols Plc, a little known and small-capitalised food processing company. Let’s get in on it.

Corporate information about the company

Incorporated on August 26th, 2004, McNichols Plc is a relatively new FMCG player which has been manufacturing/processing and merchandising packaged food products in Nigeria for over fourteen years. These packaged foods range from various types of white and brown sugar, to beverages such as cocoa drinks, as well as custards.

Bua group

McNichols Plc is also an indigenously-owned company. In other words, it is “proudly Nigerian”. According to information made available to the public, the company claims that its products “are designed to be of the highest international standards with value on every purchase made.” But while this may be true for a lot of people, a handful of other consumers who have tried these products (particularly the cocoa drinks) tend to disagree.

Moving on, the company also claims that one of its main priorities is to continually ensure that Nigerians are healthy. One of the ways it does this is by producing good products that will meet the nutrition needs of the people, continually improving on the quality and nutrition of its products, and basically offering value for every kobo spent by Nigerians on the purchase of any of its products.

A look at the company’s target market and some of its product brands

McNichols Plc’s primary target market is Nigerian families. Apparently, the company desires that its sugar brands, as well as cocoa and custard drinks will become integral parts of the main course meals on most Nigerian breakfast tables. Little wonder virtually all the products have the word “family” prefixed to it as you can see below.

Some of the product brands that are manufactured and marketed are:

  • Family Choco (3-in-1) Custard
  • Family Vanilla Custard
  • Choice Icing Sugar
  • Family Milk (3-in-1) Custard
  • Choice Baking Sugar
  • Family Cube Sugar
  • Family Granulated Sugar

Composition of the company’s board of directors

The company’s Managing Director/Chief Executive Director is Mr Chimaraoke Ekpe. He is an alumnus of Abia State University, having graduated with a B. Sc. Degree in Business Management. He also holds a Master’s in Business Administration (MBA) from the Lagos Business School. He is said to be an experienced business executive, with previous stints in several reputable organisations, including KPMG. He has been a key leader at McNichols Plc since it was founded in 2004.

Another important member of the company’s board of directors is Mr Olusegun Layode, the Chairman. He graduated from the University of Lagos with a B.Sc. Degree in Chemistry. He is also an alumnus of the Lagos Business School where he studied for an MBA. Mr Layode is a Fellow of the Chartered Institute of Accountants of Nigeria. He also has vast experience in the financial services industry, having held key executive positions in such banks as Fidelity and the now defunct Standard Trust Bank.

Other notable members of the company’s board of directors are Mrs Nneka Briggs, and Rev. Onyebuchi Agubesi.

Listing on the Nigerian Stock Exchange, NSE

Over the past fourteen years since its establishment, McNichols Consolidated Plc has managed to establish some level of identity in the Nigerian manufacturing and Fast-Moving Consumer Goods industry. Following its relative growth over the years, it became a quoted company; with its shares listed on the Nigerian Stock Exchange (NSE) on December 18th, 2009. This move created an avenue for the general public to partake in the ownership of the company. But according to the NSE, the company’s market capitalisation currently stands at a mere N140, 481, 000. This makes it one of the least-capitalised corporate entities on the Nigerian bourse. Moreover, the share price as at Friday January 4th, was 43 kobo.

Coronation Research

Who are McNichol Consolidated Plc’s competitors?

The company faces three major competitors in the fast-moving consumer goods sector, namely: Dangote Sugar Plc, Sun Surya Enterprises Limited, and TTL Rahal Nigeria Limited. These companies also manufacture and market the equivalents of the brands for which McNichols Plc is known. For instance, everyone knows that Dangote Sugar is a dominant brand across Nigeria. And while TTL Rahal Nigeria Limited and Sun Surha Enterprises Limited may sound unfamiliar to many, their custard brands – Lady B Custard and Checkers Custard Powder – have all gained quite the popularity among consumers in Nigeria.

It is also important to point out that McNichols faces an unusual competition from other FMCG giants, particularly Cadbury Nigeria Plc and Nestle Nigeria Plc. These two companies are dominant players in the coco beverage market, thanks to their popular brands – Bournvita and Milo. Seeing as one of McNichol Plc’s main products (i.e., the Family Choco (3-in-1) Custard) is a combination of cocoa and custard, this automatically pits the product against other wholesome coco products such as those made by the above-mentioned companies.

A look at the company’s financial performance

According to the company’s unaudited financial statement for the third quarter period ended September 2018, total revenue earned stood at N640.9 million while profit after tax stood at N27.8 million.

Overall, the company performed better during the 9-month period in 2018 compared to the same period in 2017. This is because even though the total revenue for Q3 2017 was N769.2 million, the profit after tax was nearly N4 million less than what was recorded in Q3 2018: N24.1 million compared to N27.8 million. Moreover, the cost of sale for the period ended September 2018 was less (N508.8 million) compared to the cost of sale for Q3 2017 (654.3 million).

As noted earlier, McNichol Plc is a small company. This, to a large extent, explains why its revenues and profits are counted in millions of naira instead of billions. But this notwithstanding, the company needs to do more in order to improve on its financial performance.

Our observations and recommendations

There is no doubt that McNichols Consolidated Plc has a very viable business model. Its major problem, however, is the competition it faces. But while competitions are challenging, they also present opportunities. So, the company needs to identify the opportunities and take advantage of them. It should exploit the uniqueness of qualities of its products, using them as marketing strategies to win over more customers.

Speaking of marketing, the company should indeed, consider doing a lot more of that. One of the most effective ways to get potential customers to try new products is by communicating the benefits of said products to them. This is something that advertising communication and marketing does.

Also, McNichols Consolidated Plc should ensure that its products are adequately distributed and readily available at the outlets where they will be purchased. The importance of this can never be overemphasised. This is especially important because in the course of researching for this article, some of its products were sought but not found in two of the biggest shopping malls in Lagos.

Lastly, the company could, perhaps, consider raising capital this new year to facilitate its expansion efforts. But these are mere suggestions. Chances are that the company’s management and board already have a whole lot of plans in place for 2019.

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