Entrepreneur explains how she created healthy fast food brand Nuli
Ada Osakwe started Nuli as a fruit juice delivery company operating out of her kitchen and delivering to customers by motorbike. It has since expanded to sell a range of food and drink products in the country’s largest supermarkets, as well as six cafes between Lagos and Abuja. Osakwe tells James torvaney on the growth of the company, the challenges it has encountered and the opportunities in the healthy food industry.
Give us an overview of your business.
Nuli Juice is a fast, casual food brand. Our mission is to galvanize healthier lifestyles through fresh, locally grown food.
Our food and drinks are made with local products from indigenous farmers. For example, fonio stir-fries, cassava waffles and fruit juices.
We currently have six physical stores in Lagos and Abuja. It’s a mix of department stores – with plenty of seating where people can eat, have meetings, and relax – and smaller outlets that are more focused on ‘take out’ customers. We also supply Nuli brand products to supermarkets and hotels, and manufacture drinks and snacks for other retailers.
What motivated you to create Nuli?
Starting Nuli Juice was an accident – I never wanted to be an entrepreneur. After working in finance, I became the senior investment adviser to the Nigerian Minister of Agriculture, working to attract agricultural investments to Nigeria. In this role, I observed how Nigeria sent over $ 10 billion annually by importing basic items like rice and fish.
The country does not have a strong national transformation such as cold storage, electricity and logistics, which makes industrialization and the creation of real wealth difficult. In addition, around 60% of harvested fruits and vegetables are thrown away. I was like, “Why are we spending all this money on imports when we could produce it ourselves?” Why are we wasting so much nutritious food? I was motivated to provide the answers to these questions, and Nuli’s founding was the first step towards that.
How did you get started? What was your first product?
I started making natural juices in 2015 in my kitchen at home. I have seen data showing that although Nigeria is a large producer of fruits like pineapples, hardly any of these local products are processed into fruit juice.
We have set up a simple online presence and offered delivery only, via motorcycles. After that, we started going to food fairs, gyms, cafes, hotels and supermarkets to sell the juices. We were eventually able to get into big chains like Shoprite and Spar which helped spread our name.
We have seen a strong demand from customers for fresh and healthy food alternatives. So, after a year of delivery only offer, we opened our first Nuli Lounge cafe with a meal offer to add to our branded drinks. We broke even in 2016. In 2018, once we demonstrated that we could derive a sustainable profit from the business, we raised $ 850,000, primarily from angel investors, which we invested in. the development and construction of new stores. At the start of 2020, we had 10 stores in total, including internal offices at companies like KPMG and the Nigeria Stock Exchange.
Where do you see the greatest potential for Nuli – in packaged products or in the restaurant chain?
Both are fast growing income lines. My ambition with Nuli is to build an international African brand that goes global, that will integrate as much in Nairobi and London as in Lagos. Our juices help us do this, but restaurant expansion is at the heart of our medium-term strategy.
Internationally, there are so many similar food and drink brands that you compete with for storage space. But with brick-and-mortar stores, we retain a lot more control over the overall customer experience, so we can build a much stronger brand.
You mentioned some of the infrastructure challenges facing the agriculture sector in Nigeria. How do you deal with these supply chain challenges?
To keep our promise of fresh food, we need to keep our supply chain as tight as possible. We buy all of our items locally, even things like strawberries and black currants, which are grown in Plateau State. About half of our products come directly from farmers and the rest from intermediaries.
Then we have a cold room in our factory in Lagos. This helps keep the produce fresh, but it still needs to be processed and sold within days. One of the things we do is make sure that there is direct communication between the store and the inventory. Every store has “Nuli Champions,” who spend all day talking to customers and monitoring what products are selling. They provide daily information to the factory on what is selling and what people are asking for.
A few years ago, I seriously considered investing in an HPP (high pressure pascalisation) cold pressing production line, which would have allowed us to extend the shelf life of our juices without any additives. In the end, I decided not to do it, because it was still a risk. We could squeeze our juices cold, but what if the truck breaks down during transport or the retailer’s refrigerator doesn’t work? There are still parts of the supply chain over which we have no control.
We keep much of the supply chain in-house – we barely outsource our last mile logistics. We have tried in the past, but have encountered problems because often third parties do not provide the level of service that people expect from the Nuli brand. So now we are investing in our own refrigerated trucks and motorcycles.
What are the biggest operational challenges you have faced?
Compared to countries like Ghana, operating in Nigeria is extremely difficult, especially for small businesses. I am very fortunate to have built a strong network of people I can call on from my previous career in Private Equity and the Department of Agriculture. But even so, there are a lot of roadblocks. Obtaining a simple NAFDAC (National Agency for Food and Drug Administration and Control) approval for our juice took about a year. Rent is another difficulty – landlords ask at least two years in advance, sometimes up to five years. This makes it really hard to scale and extend.
We opened our second store, in Ikoyi, in July 2016. The first few weeks went well and we had a good customer base. But less than two months after opening, the Lagos government came and demolished our store, due to a dispute they had with the landowner. One day it was business as usual – the next day the store was no longer there. There was no consultation.
After that, it was difficult to be resilient. I had invested so much time and money in the store, and it left me in a very dark place. We’ve gone from juicing in a beautiful modern space to a small, dark kitchen. I was so embarrassed, but I wanted continuity – I didn’t want to interrupt operations. It took us almost a year before we could return to a store worthy of the name.
How has the coronavirus pandemic affected your business over the past year?
Before the coronavirus hit, we were operating 10 Nuli outlets, including office concessions. With the evolution towards teleworking, we are currently at six.
The pandemic has forced us to think about diversifying into other revenue lines such as manufacturing for other outlets. We started working with a large chain with outlets across the country. They wanted takeout sandwiches and other food items to sell under their brand. It’s a small part of our overall business, but it’s still a useful income line.
With people spending more time at home and less time in the office, we had to think about how we can stay close to our customers. One of the new things I’m excited to roll out is Nuli-in-a-box. These are converted shipping containers that are smaller than our regular stores, but are much more flexible and make it easier to establish a presence in higher density residential areas.
What are some of the food industry trends that you see?
We continue to see trends towards more health conscious lifestyles, especially in plant-based diets with younger generations. That said, plant-based diets are still not common in Nigeria, although much of our cuisine actually lends itself to whole plant-based diets.
In Nigeria, looking at our business, we notice some interesting trends in customer behavior; for example, we have found that in our store in Surulere, people prefer to sit down and spend more time in restaurants, while other areas are turning more to take out. Additionally, we found that Nigerians are less fond of cold foods, so we tried to focus our take-out offering on hot foods, like our grilled naaninis and stir-fries.
What about the technology? Do you see opportunities there, for example with food delivery apps?
The focus is on technology, but unique food delivery apps haven’t really taken off in any meaningful way. Even when people know we are online, they still order through Whatsapp or over the phone. This trend is changing, however. Online orders made up 1% of our sales in January, but in June they are now 5%, with no marketing spend.
We also see a lot of technological opportunities behind the scenes. For example, we use technology to become more customer-centric – to anticipate and project demand, understand behavior, remember people’s favorite orders, etc. We see a lot of machine learning applications for our business. I also believe that there are opportunities to use technology to improve the traceability of products from farmers to consumers.
James torvaney is a business consultant and financial advisor specializing in West Africa. He has worked with clients in a number of industries including technology, manufacturing, consumer goods and hospitality.