Lagos, the Beautiful

2.2.19
Lagos, the Beautiful
By Eben van Tonder

First Contact

When Franjo, a friend from the Czech Republic called me about an opportunity in Nigeria and I spoke to Haresh, the MD of the company who presented the opportunity, I was skeptical. I was in Philippi at the sausage factory and took the call in my car not to be disturbed and where I could charge my phone while I talk to them. Haresh convinced me to come over and have a look at the business proposition. I came to Nigeria the first time in October 2018.

Lagos – my reluctant approach

I was unprepared. I did not have my visa confirmed before I left for the airport. I needed a visa to board. When I got up I googled if I need a visa. “Yes!, I need one.” Must be pre-arranged. Minette was still asleep. I sat on the bed after getting dressed and she asked me if something was wrong. She sat up immediately. I told her I don’t think I will get on the plain. “Go to the airport and if they don’t let you on the flight, then that is how it works out!” Her advice was sound.

At the airport after being told I will not get on the plain with no visa letter, I contacted Franjo who was boarding in Germany at that moment. Franjo contacted Arun who pre-arranged everything and simply forgot to send me the visa letter. I was swiftly sorted out and on the plain.

I flew Namibian Airlines which must be the worst airline in Africa. I had a horrible stopover in Windhoek where I almost missed my connection to Lagos due to my leaving for Windhoek for a business meeting related to the bacon grids.

Finally, on the flight, the poor state of the aircraft continued with no in-flight services apart from a poorly prepared meal.

Lagos – I hated

The reception at Lagos airport was like that of a statesman with a personalized escort by a military officer through customs. At first, I was not sure if I was being arrested or treated as a VIP. It was, fortunately, the latter and brilliant arranged!

Lagos, on the other hand, was hard on the system. It is so different!

Haresh and his team immediately impressed with a very tight work schedule but this is not my first rodeo with people who want to do what Haresh and Karan are planning and I remained skeptical.

More than anything, I did not like Lagos! I experienced it as a hard, relentless city! The worst day of the trip was when I visited an abattoir in Lagos. The largest cattle market in the enormous city. I saw and experienced things which I would rather forget.

Cape Town Visit

Haresh visited Cape Town in November for a week. I took him around and despite having a very good time with him, I remained sceptical. I have seen many people fail at the venture they were embarking on but as I would later learn, there is only one Haresh! I would sit and smile in some of the meetings we would later have simply because I realize I am seeing a master at work!

Our Two Businesses

I was busy with my own plans. I had two clear plans (apart from options in New Zealand). I started a business to process trim for Woodys by, on the one hand making low-cost sausages and on the other hand, sorting it into fixed ratio trim which was then tradable and there was the business of producing and selling a bacon production system we call the bacon grid system.

The need for trim to be processed arose from the fact that over the years Woodys accumulated and an enormous amount of trim in freezers that had to be processed and turned into cash.

Why such an insane amount of trim was even built up in Woodys and why on earth we did not trade it out when the volumes became unmanageable was a question I asked myself many times.

Strangely enough, I really only made peace with it during this Jan 2019 trip to Lagos. The subject of companies who accumulate such trim randomly came up one night in a discussion after work. A colleague who will be part of the Lagos project is a master butcher from a country west of Germany. We talked about meat processing every night till 12:00 after work and many days we simply worked till that time. This particular evening he brought up the subject of trim being accumulated by companies. According to him, it is a typic experience in the meat industry. It apparently happens so frequently in Europe that an entire industry developed to work away exactly the kind of trim in some countries. As we discussed things that evening, the reason why it happens became clear to me and a fuller picture of how one should deal with it when it does. Financial losses don’t have to result from it! See my conclusion in an article I did on why accumulating trim in this way is not desirable. The Freeing and Storage of Meat.

Tristan, my son, jumped in to help me with the trim and sausage business while I made good progress setting up the bacon grid business. See my synopsis of the Best Bacon System on Earth.

The greatest joy of my life was doing the trim and sausage business with Tristan. Not for a second would I ever regret the days that we spent together and my hope is that one day I will have the same opportunity with my little Lauren also! Our meetings in the Petrol station in Philippi at the BP in Main Road, Claremont is legendary.

Not Minette nor I am people who like glamour. The business with Tristan took us in interesting directions and we set up a small sausage outlet in Wynberg where we catered for the lowest echelons of society. There are so many great stories to be told from this site but the highlight must be Penny Lane. Situated in a small ally, close to where we had the outlet, her prices are very low and her quality sky high, attracting so many patrons that there was a line every day to get into her restaurant. We often had breakfast there.

Our motto for the business ventures was, “Fail small, fail fast”. We did that with the sausage business but did not follow quite the same motto for the trim that we re-worked into fixed ratios. Here we would sometimes process 4 tonnes per day.

The trim was packed very poorly by Woodys. Often directly into cardboard boxes. We partially thawed it (never completely), treated it for any possible bacterial contamination, sorted it in a 70/30 VL ratio, packed it in proper bags and exported quality boxes. While in bags only, we blast froze it again before we boxed them. Micro tests I did on the meat to validate our procedure showed remarkably low TVC’s. One client ordered 35 tones of the reworked trim. The client rejected the entire batch. The financial implications of this were huge and a frantic time followed where I had to manage the failure of this part of the business from a legal and business perspective on the one hand and try and understand why it failed from a technical, meat science perspective. After I figured out the “why” and the “how”, I had to validate my findings which I did in a series of trials I did where I only used this trim meat to produce viennas with and evaluated the water-holding capacity, microbial stability and organoleptic characteristics of the sausages. My findings were validated and we stopped the re-working of the trim completely. See The Freeing and Storage of Meat for the technical aspects behind such trim accumulation.

The fact that trim is safe for consumption with negative organoleptic characteristics forms the basis of as what and how such trim can be used up by producers. It would, however not apply to Woodys due to the volume and the fact that it was being stored in third-party storerooms at a cost per kg, per month.

We were left with the low-cost sausage business. Fail quick and fail small. The project was a success but a relatively large capital investment would be required to make it financially viable. In absolute terms, the amount required would be small, but too large for us to make ourselves.

During this time I started getting excited about Nigeria. Nigeria was not a second priority. In my own mind, I find only so much head space to deal with matters and when the sorting of the Woodys trim became problematic, it was difficult for me to find headspace for Nigeria.

The focus points in my mind were being ticked fast. I developed an understanding of what it would take to be successful in the bacon grid business and the sausage business and what is the state of the trim from a biochemical perspective. We are unwilling to make the investment required to make the sausage business work since one aspect of it remains untested and we do not want to risk the possibility that the untested part of the business proves to be unmanageable. The Bacon Grid business is going on but the sales cycles are very long and investing in starting new possible clients will be a mistake. The game plan is to work with the possible clients who are already on board and wait for these cycles to conclude before new possible clients are approached. Marketing the system is very expensive due to the fact that selling it requires extensive travel and expensive samples which in every case involves customization for every particular client. The meat science reality of the trim caused us to abandon the resorting of trim all together. Suddenly I had the headspace to focus on Nigeria.

I made a commitment to Haresh that I would come to Lagos to meet the team of international consultants who are working on the project at the end of Jan 2019. I was still very skeptical about it, but this was due to the fact that I never really focused on it. Finally, I was at a place where I could give it my 100% attention. Besides this, I gave Haresh my word and wanted to follow through. So, it happened, that I traveled to Lagos again at the end of January 2019.

As a side-note, there is still a small remnant left of the trim business which I want to see if it can rise from the dead; equally, there is still one meeting to be had related to the sausage business but in both cases, if simple requirements cannot be met, we will walk away from it and close them down completely. The biggest client we have left in our sausage/ trim business must pay his account on time and the producer we used for the sausages must agree to give us a franchise under his name and do the shop fittings for us. (Which turned out to be a real opportunity since they are interested in setting up just such outlets). Without those two things, we will walk away and even if we don’t walk away, these are opportunities that Tristan can handle very well on his own. The grid business is a bit more secure, but I would spend no more money on it. In any event, the work of understanding the businesses have been done and we have the facts required to make sound decisions either to continue or close down. Now I can focus on Lagos.

Lagos, the Beautiful

A few things were completely different on the January 2019 trip.

Firstly I already received the bad news about the supply chain of animals on my previous trip and I was able to move past all of that and focus on finding solutions. Meeting people who would materially contribute to the solution helped a lot!

Secondly, I was bowled over by the skill and ability of Haresh’s project team! Without any question, the most experienced and competent team I ever worked with. This fact changed my view of Nigeria and what Haresh has put together. If I would go into this venture, it would not be blind faith in a concept, but confidence in an extremely efficient team.

Not only Haresh’s project team was impressive, but I started meeting exceptional Nigerians who were close to the project. Of course, Kole and Alhaji Lawal are impressive individuals. Olusegun Okeowo impressed me. He is a man who grew up in the UK. He is the MD of a company who offer veterinary services to meat plants and local government in the UK and Nigeria. He has written the food laws on at least one state in Nigeria. He brings oversight over abattoir operations which is exactly what is needed and the veterinary side for meat inspections that would be the bedrock of the hygiene component of the project. His scope of work included chemical residue in the meat of the animals and the raising and fattening of cattle.

There is Dr. James Marah, a US-educated man with a Ph.D. in biochemistry. He worked at Pillsbury, the founding company of the HACCP system where he was mentored by people who developed the system.

He has been living and working for the last number of years in Nigeria where he is establishing HACCP as an acceptable food safety system.

The fourth thing was not a new discovery but a reinforcing of something I knew. It is the brilliance of Mr. Haresh Keswani! I again saw it clearly. He is simply put, a force of nature and as I saw him in action, it dawned on me that I will in all likelihood never work with a man as brilliant as him again.

The fifth thing that changed was that I got stuck into the actual factory design. Pulling it all together was daunting and I wrestled with the many SKU’s that must be produced from many species and many cuts. The factory would be very complex and I never liked “complex”. I had to find a simple basis for the factory design. One day the basic layout dawned on me as clear as crystal!

The one single thread of the first part of the factory is decomposition. The skill of taking apart. The second half of the operation is the skill of construction. Using the basic components created by the decomposition team and building exceptional products from it.

These would be fed along three product corridors through the entire construction process until it reaches the final “packing stage” where 4 or 5 packaging solutions would wait for it. Then off to boxing, freezing or chilling storage and picking for dispatch.

I was back in factory mode and I loved it. I love production but when it comes to factories, this is what I insanely love and is good at!

I realized that in building a factory and an artisan tradition, we are working with beauty every single day.

My view of Lagos changed. I no longer saw the filth on the side of the road or the beggars on the streets. I saw a land with vibrancy and beauty, populated by amazing people! I heard their music and I saw them dance!

This time I did not count the days until I leave. Of course, I wanted to go home, but I just as much wanted to be part of the work the following week.

Lagos is a gateway into West and Central Africa and South Africa are a short 5 hours flight away. Only an hour longer than a flight from Cape Town to Johannesburg and back.

It is one of the mega city’s in the world and from a business perspective, an excellent place to be.

The final and very important consideration relates to risk. The opportunity is embedded in a very successful business. It is by itself not a new venture, but the logical progression of an existing one. It is improving the supply chain of products that are already being sold profitably. The opportunities in South Africa are all new ventures except the grid project which is the only SA project which I see taking off. (The sausage business can likewise work if it is embedded within the structures of the company where the sausages are produced but whether they are willing to do this remains to be seen). The trim business for Woodys was undertaken as such an “embedded” opportunity within a larger business which is what appealed to me. This is exactly why Philips deboning business, Meat Only who essentially is an outsourced deboning operation for Woodys worked, but it was started at a time of greater stability. A lack of understanding of the state of the raw materials technically coupled with instability in Woodys caused the trim project to fail. None of these factors are part of the Lagos project!

My focus is definitely on this project and working through the possibilities and how I can make it happen within the context of the hopes and dreams of my family is now the task at hand.