10 November 2012

Rwanda: A Dairy Fortune Undiscovered


Alas! It would come off as a shocker to many of you that Rwandan people drink the least amount of milk in the East African region.

I have always thought that Rwandans drink a lot of milk. My thoughts were based on the Rwandan culture that depicts a cow being at the centre of economic activities of the Rwandan people. This is apparently not true due to a cross-section of crosscutting issues.

Let's look at the regional figures. Even though, they don't cut an impressive posture, especially for Rwanda. Kenya leads with per capita consumption of milk at 111 litres, which is 89 litres adrift of the recommended amount by Word Health Organization. Uganda, Tanzania and Rwanda record a paltry per capita consumption of milk at 50 litres, 43 litres and 40 litres, in that pecking order.

Rwanda is 160 litres of per capita consumption of milk adrift of the recommended figure by the World Health Organization. This is serious.

According to the recent survey by East Africa Dairy Development (EADD), milk production in Rwanda knocks down demand hands down. There is already an oversupply of 52 million litres of milk, annually which is not that significant, but the gap will grow to an oversupply of approximately 375 million litres of milk by 2020 annually unless some strings are appropriately pulled.

Milk is a very strategic commodity, we must agree. It enhances both wealth and health. Besides being an economic aspect that can impact on many households level of incomes, milk provides a solution to eradicating malnutrition that continues to be up and about in our communities. In other words while there is an oversupply of milk, there must be no room for malnutrition in Rwanda

With economic value, dairy sector holds a key position. If Rwanda can meet even just Kenya capita consumption, the additional dairy demand would yield positive impact on the subsector which is apparently contributing 15 percent to agricultural gross domestic product and 6 percent to the country's overall gross domestic product.

There are a number of issues that are limiting demand for dairy sector by consumers and non-consumers.

It's established that competition with other beverages and consumer perceptions essentially threaten milk/dairy's share of throat and wallet. A perfect scenario to cushion this statement is the figures Bralirwa. The brewer recorded net profit of 2011 soaring by 42 per cent on higher pricing, new brands and rising sales of its beer brands and soft drinks.

Lack of variety in terms of milk flavors is another limiting factor for demand growth. This is an opportunity to attract those who don't like the old school taste of milk. We could add to it some banana, strawberry, chocolate, vanilla, bubble gum and coffee. Our processors should explore this as an opportunity to appeal to non-users and grow value-add market.

Cost is also a limiting factor for the dairy demand. It's indicated that 78 percent of those who don't consume processed milk cannot afford and think that it's very expensive.

Although these figures are not that interesting to look at, they present a great fortune settled at the bottom of the pyramid for processors like Inyange Industries, Blessed dairies, Nyanza Dairies and others.

We can arguably increase our sales if we put affordable packed milk within the reach of low income earners. The Rwandan people actually like consuming milk but they just cannot afford a liter or half liter of processed milk at about 1,000 and 500 Rwandan francs, respectively.

At this year's Rwanda International Trade Fair at Gikondo grounds, Inyange introduced a 250 mill/litre-pack at 150 francs, and consumers fell over themselves to empty the stall before long and many more could not find the product on display as stock ran out.

Such a package at such a cost would bring down the litre of milk to only 600 Rwandan francs, and reduce the number of shelf days of a one liter-pack at 1,000 francs. In addition, the presence of Inyange milk despensers in strategic places in Kigali city has improved distribution, which would also drive the price to 600 Rwandan francs a litre. These dispensers, so far installed in three places in Kigali City, hold 300 litres of milk and they are usually empted in about 18 hours. Wow!

What is the learnt lesson here? We need to grow determination and address the challenge of reaching low-income households with the conveniently packaged products they increasingly seek at a price they can afford.

We must develop products differently, distribute then differently and sell them differently to extend the availability good nutrition in our communities.

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