Mkulima today you hear in the media and social circles that value addition is the key to unlocking agricultural potential in Africa and your farm. Today we cover how to make yogurt. With your few animals join hands with a neighbor or friends.
Once you agree on the goals you need to accomplish then you can set off to achieve your heart’s desires.
I need you to remember at all times that a dream written down with a date becomes a goal.
A goal broken down into steps becomes a plan.
A plan backed by action becomes a reality. At the same time, we both know that people don’t care about what you say.
They care about what you build.
With your small team of small-scale farmers start a small yogurt business and in the process, you might scoop a 300% return on your investment.
How to make yoghurt factors to consider
Before I introduce you to the idea of yoghurt production and marketing, here is an assumption.
Remember milk prices differ from time to time and this is a general market estimate to help guide you.
Think of it this way: A litre of raw milk at the farm goes for Ksh,40.
Each litre of milk can produce about (a litre of yoghurt) four tumblers of 250ml yogurt, which currently retail at Ksh.55 each.
In a nutshell, if a litre of milk is converted to yoghurt and marketed the right way can give as much as Ksh.220 which is equivalent to 500% value addition (or 300% when you deduct all expenses).
Does that awaken your business curiosity? Well, if it doesn’t you probably aren’t an entrepreneur.
Yoghurt Production & Supply Business in Kenya
Demand for yoghurt has been rising steadily since 2010 and the market remains significantly under supplied.
This means there are opportunities for startups to thrive especially if they offer specialized services, good branding and unique recipes.
The good thing about this kind of business is that it is relatively easy to start and contrary to common belief, it does not cost much to set up.
With as little as Ksh.100,000 you can start a small production plant and re-inject the capital as your company passes various stages of growth.
When you start off don’t compete for large markets. You can start off by selling at your local or regional town and grow once your brand is well known to consumers.
This is the stage where you remember the saying goes. Act local think global.
Here is a simple step-by-step guide on how you can start a successful yoghurt making business today.
The first thing to venture into is investing in yourself and your team. Train your team and if you are a one-man/ woman band train yourself on how to make the drink.
Just as Julius Yego learnt how to throw the Javelin online and he became a world champion you too can learn how to prepare a world class recipe on your own through constant practice and learning.
At this stage where possible find a mentor to guide you through. You can either get a business mentor who will help build the business or a production mentor who will help come up with the flavors.
So go to Youtube, Food.com or any other top website and teach yourself how to make a nice yoghurt. Then invest in 1 litre of milk and use it for practice.
This is the second step in your learning curve, invest in equipment
With a small budget, you need to plan wisely so as to get maximum value from each investment.
For starters you will need a few
- high quality sauce pans (sufurias),
- a milk sieve (kichungi),
- weighing scale and
- a firewood kitchen or source of heat
As your company advances and you have the flavours ready for the market, you will need to think about packaging.
For that, you will approach a company that manufactures plastic tumblers or containers.
The go to place for such materials is the global leader in packaging of processed food tetra pak well known brand located in industrial area Nairobi.
With as little as Ksh.20,000 you can get enough branded tumblers that you will be using to package your yogurt for supply.
Later on you will find the need to invest in a pasteurizer to replace your firewood kitchen.
A pasteurizer is basically an advanced boiler and a good one goes for Ksh.350,000 or thereabout.
You can get one supplied by local firms; a good example being FinKen Holdings Limited located Industrial area of Nairobi.
The third hurdle in your dream is to get certified. Submit your products for testing by a bureau of standards before you start marketing and selling your products.
This is a key legal step that if you skip can lead to huge losses in the future for you as an individual and the company or cooperative as a legal entity.
If you are producing good quality products with the recommended packaging a quality certification is relatively easy to get.
A typical certification process will cost you about Ksh.32,000.
At this point, you need to ask yourself the age old question that everyone seems to answer differently.
Between the marketing department and the sales department in an organization which one is more important?
Several companies have them as a single department with one leader while others have it as two different department with both the head of sales and marketing reporting to one source of authority.
That makes the total team of leaders to three.
The other type would be to have the departments independent of each other with each department with its own leader.
Depending on your own needs and interest you will need to come up with your own operation style. This will depend heavily on your organizations’ culture.
Remember you will not be able to sell your products if none knows about you, while at the same time you will have no business without sales.
Get your ducks in a raw and get cracking.
- Quality – check ✅.
- Certification – check ✅.
- Packaging – check ✅.
The only thing that is missing is the market. Start small by marketing to neighboring households and institutions.
For instance, you can approach your nearest kindergarten and give them a discount so that they can be ordering from you frequently.
Or negotiate with local shops on a supply deal. This will be an easy way to generate sales than targeting large retail stores like established supermarkets where competition with established brands is stiff.
You can even hire a few salespeople who can be hawking your products.
Once you are established or you have traction then you will need to approach shops and the big retail outlets – consider supermarkets, government institutions, and so forth.
What you should basically do within the first few months of operation is to build a name for yourself and to get as many retailers as possible to stock your product.
When doing this factor in the culture of your target audience and don’t overstock in a region where consumption of yoghurt is low.
I know you are asking yourself how much to invest in order to start your venture. You can start without the pasteurizer and use around Ksh.100,000 total to set up around a firewood kitchen.
However, if you are really considering serving a big market then it’s important to factor in the Ksh.350,000 price of the pasteurizer.
Return on Investment (ROI)
You can buy milk from farmers at a price of Ksh.40 per litre and then sell your final product at Ksh.200 per litre or Ksh,50 per 250ml Tumbler (Actually the current market price per Tumbler of Yoghurt is Ksh.58).
These are estimate figures and will differ from various locations and periods
Assuming you sell 1000 litres per month, that will be equal to Ksh.200,000 in sales revenue. That could translate to a net profit of Ksh.100,000 per month (i.e after deducting all expenses).
I would like to inform you that six months of focus and hard work can put you five years ahead in life.
Don’t underestimate the power of consistency and desire.
The ball is in your court. Remember, even those big companies you see today were once small ideas that seemed too difficult to implement. So psyche yourself up and go for it – all the best.
Credits: Justine Nyachieo
Business Man & Mentor
Having an agribusiness question? Do you know of a successful agribusiness venture or story that you wish to share? I would like to hear from you. Send me the TIP(s) at email@example.com
Like and follow MkulimaTODAY on Facebook | twitter | Pinterest | Instagram | Group share this article and leave comments or questions or WhatsApp me +254700761190 on what you would like me to answer in the next article.