Honeywell Flour Mills – A Self-Raising Business
Honeywell Flour Mills PLC is a major flour milling company in Nigeria and was initially registered as Gateway Honeywell Flour Mills Limited in 1985. However, in June 1995, a change in the company’s ownership structure led to a change of name to Honeywell Flour Mills Limited. We learn how Honeywell Flour Mills went from the smallest mill in the country to one of its most competitive.
“The company started as the small company with a very small capacity,” explains Lanre Jaiyeola, the managing director of the firm. “At that time there were about 15 or so flour mills in Nigeria, today there are just four flour mills thanks to acquisitions and consolidation. Honeywell started out as the smallest flour mill running different projects and developments to grow the company.”
Beyond the Blend
From the very beginning, Honeywell distinguished itself through quality.
“In those days there were concerns around quality of flour brand, so bakers always blended flour brands. Honeywell offers one brand, and within three months of commencement, the capacity was fully realised,” Jaiyeola says. “The first thing Nigerian bakers want is the comfort around the name of the flour brand, so our major unique selling point is that we have a brand and are consistent in quality and consistently reliable. Bakers don’t want any surprises that will affect the quality of their bread output and Honeywell offers that comfort.”
It’s as true today as it was then, and product quality and quality consistency remain key competitive advantages for Honeywell.
“The quality of our brands sets them apart. We always leverage the quality of equipment used in manufacturing its products and well-trained technical personnel,” Jaiyeola says. “We pride ourselves that our people are perhaps the most trained in the industry.”
Honeywell is also a highly recognised name, offering a strong corporate and products brand for consumers and the baking trade alike. For example, Honeywell Flour has higher and stronger equity than most of its peers, with 92% of the respondents to a survey conducted being aware of the Honeywell Flour brand. As well as being recognised for quality, they are also known for the calibre of staff the company has.
“We have staff who are well trained and know exactly what the customer wants,” Jaiyeola says. “We recognise there’s a knowledge gap in the baking institution in Nigeria.”
That skills gap isn’t just about potential recruits to the company- but also potential customers, as Jaiyeola points out, “Mostly among independent bakers, the sole proprietors so to speak. So Honeywell set up a training school to train Nigerian bakers in the science and art of baking.”
Since 2006, Honeywell has run the HFMP Baking School to enhance the baking knowledge of bakers through formal and informal training at their baking school and baking seminars around the country to expose people in the industry to more efficient baking methods and skills that will improve their business overall.
Honeywell’s staff do not lack for knowledge.
“Our technical field officers are always available to provide support and on spot training on best product handling methodology to users, “Jaiyeola says. “Honeywell goes the extra mile to train our employees locally and overseas. We don’t train our people for training sake. Following each training, we conduct an impact evaluation to ensure learning takes place that will benefit both the individual and the business.”
The Backbone of an Industry
While nobody could deny that Honeywell has the knowledge and the reputation to provide quality products to the Nigerian marketplace, they also face challenges.
“The biggest challenge the company is facing today is a dearth of critical infrastructures such as electricity, urban roads, railways and efficient port facilities,” Jaiyeola admits. “Access to the seaport where our factory is located has remained challenged for many years, with a more disturbing turn in the past year. The succour currently being provided by Government should offer some improvement in due course. Similarly, the cost of products delivery around the country has suffered about 75% increase over the same period last year due to the state of the roads, damages to delivery trucks and high turnaround time.”
Meanwhile, the lack of reliable grid power also increases the cost of doing business. Power is the second-highest cost driver in Honeywell’s cost of sales following direct raw materials. Fortunately, Honeywell is investing in responses to these challenges.
“To address the challenge of access to Apapa, we have had to recruit a significant number of transporters (to provide options) to evacuate products from the Apapa factory, “Jaiyeola says. “We also operate satellite warehouses in different regions of the country where customers can pick products from, hence saving them the hassle of coming to Apapa to pick products. This comes to us at a huge cost but enables us to hold our market share. We now use barges to transport trucks from one end of town where traffic is not as chaotic.”
Honeywell’s power production has also been outsourced to an IPP; Uraga Power Solutions Limited which now has full responsibility to provide uninterrupted power for their operations, albeit at a higher cost when compared to power from the national grid.
However, Honeywell’s investments go beyond simply strengthening their infrastructure.
“We have invested significantly in organic growth in the last five years,” Jaiyeola says. “Particularly the pasta factory at our Foods and Agro-allied Complex in Sagamu, Ogun State. This additional capacity increased our pasta production capacity by 165%. The expansion provides us with the opportunity to satisfy the increasing demand for pasta and create a portfolio of products that address most of the different segments of the pasta market.”
Research and development are also crucial parts of Honeywell’s strategy going forward, with a particular emphasis on the use of locally available raw material for food production.
“We are now at a point where we have a pipeline of products that will be launched. One is currently in development,” Jaiyeola says. “We have invested in technology with the upgrade of our Enterprise Resource Planning System (ERP) to take advantage of the opportunities it presents in terms of growth, efficiency and cost savings. We have also invested in route to market capabilities to ensure our products get to our customers on time and in full.”
Going forward, Honeywell intends to continue to innovate and renovate their products so that they meet and exceed consumers’ expectations, increase their market share across all categories, and expand beyond the wheat-based products that currently make up their product portfolio.
“In the future, the board and management have a lot of strategic initiatives around the growth of the company. Today the turnover of the business is below 100 billion nairas, that is about 200 million dollars. So, the ambition of the business is to cross the 100-billion-naira turnover mark and for this reason,” Jaiyeola says. “The ambition in years to come is to turn this around such that business-to-consumer trade will make up a larger percentage of our turnover than business-to-business, so we focus on our capabilities in distribution so that we’re able to position the business.”