EUNINUK VENTURES JUNE

Transcription

1 Case Study on EUNINUK VENTURES JUNE 2016 By Kathleen Jack (EWB Canada) and Senam Aseye Bridget (MBC Africa)

2 Introduction to Euninuk Ventures Located in the bustling town center of Ho is Euninuk Ventures. Euninuk specializes in two key products. Her primary line of business is ceremonial communion wine and her secondary line is fresh, organic fruit juice made to order. The business owner and founder, Eunice Nuku, sets a precedent for women entrepreneurs in the Volta Region and is currently seeking to expand her business. Industry Background Potential Market for Communion Wine and Organic Juice Communion Wine Ghana s religious acumen makes the potential market for commercial communion wine a strong business prospect. About 71.2% of the total population belongs to the Christian religion as a part of Pentecostal/Charismatic, Protestant, Catholic, other branches of the

3 religion (CIA World Factbook, 2015). Currently, the suppliers for communion wine are restricted to imported products from select premium shops located in urban and semi-urban area, medium sizes Anglican bookstore and blends that are produced locally by individual parishes. The absence of large scale, local production of communion wine that can be sold at a low price represents a key gap in the market. This gap represents a niche market that can be filled by an innovative and entrepreneurial private enterprise. Organic Juice Additionally, increasing demand of organic juices in both the greater Accra area and abroad represents a key opportunity for small and medium size agri-business to develop in high quality fruit and fruit juice production processes (Kleemann, 2016). Higher quality products that target this developing organic market will earn a premium price when compared with juices produced using conventional fruits (Kleemann, 2016). Increased returns in combination with a growing appetite for high quality fruit juices in Accra and for export create an ideal market for producers in Ghana. The choice to use an organic value chain for fruit juice production has a host of external benefits that promote the wellbeing of Ghanaian farmers (Bolwig et al., 2009; Kleemann, 2016). In particular, price premiums for organic products have a trickle-down affect that increases the income and the profitability of primary producers (Bolwig et al., 2009).

4 In the case of pineapple, a key input for organic juice, prices for organic fruits are approximately 40% higher than those of conventional fruits in the export market (Kleemann, 2016). Reduced use of pesticides has positive health impacts (Bolwig et al., 2009). Additionally, production costs for organic fruits are generally lower then that of conventional production given the high cost of inputs such as pesticides and synthetic fertilizers (Kleemann, 2016). For example, organic pineapple production cost on average US$0.085 per kg as opposed to US$0.093 per kg for conventional production (Kleemann, 2016). The key challenge for smallholder organic producers is to secure a local market place (Kleemann, 2016). Organic juice production could be the answer for these high quality organic fruit producer. To conclude, organic juice production not only has the potential to benefit producers, but can also improve the livelihoods of small holders organic fruit producers. Productivity of Communion Wine in Ghana Communion Wine Communion wine in Ghana can be found premium wine stores, religious shops in addition to being locally brewed by individual parishes. The current state of locally produced communion wine remains relatively inefficient in terms of both pricing and production. Inefficient production remains a limiting factor of procuring communion wine locally. Reliance on high price exports and single-site production are the key inefficiencies associated with the current market for communion wine production system in Ghana. A high-level evaluation of the market dictates that most products sold in conventional wine shops are imported from nations such as Spain and Portugal. Imports are liable for at least 35% taxation upon arrival (Ghana Revenue Authority, 2011). As a result, the cost burden of the tax is, in part, transferred to the customer (Ibrahim et al., 2015). After tax, the average cost of one bottle of imported communion wine sold approximately 103 GHS per unit (Cave and Gardens, 2016). This is a relatively high price that is comparable to smallholder producers who sell a diluted bottle of locally produced wine at Evangelist bookshops for approximately 15 GHS per unit (Destiny Anglican Bookshop, 2016). While local bookshops are able to sell for lower prices, supply channels are often difficult to secure. In addition to the limitations of premium priced imports, Ghana s current communion wine production is inefficient due to the current state of localized, parish-wise production. Firm-wise production has been cited

5 in literature as inefficient, whereas, specialization and using and economies of scale strategy allows for organization, parishes included, to dedicate more time and attention to the activities in which a comparative advantage is held (Costinot, A., & Donaldson, 2012). Therefore, the most efficient option for parishes is to purchase communion wine from an external provider who is specialized in this type of production such that additional time can be dedicated to other activities. Currently, large scale, local communion wine production remains a relatively untapped business opportunity. Organic Juice Currently, organic juice production in Ghana is challenged in terms of productivity. Securing stable distribution channels in combination with the early stage growth of the fresh, organic juice market are challenges that must be overcome by innovators within the emerging market (Kleemann, 2016). With a careful, strategic distribution plan, organic juice producers could see economic gain from the growing demand of such high premium products. High-level Competitor Analysis Listed below is high-level information about key market players and their contributions to both the communion wine and organic juice industries. Table 1: Communion Wine Competitors at the smallholder, medium enterprise and large importer levels Company Location Size/ Capacity Cave and Gardens West Africa wide Large. Imports products from abroad. Destiny Anglican Bookshop Production at local Parishes Central Accra Ghana wide *These businesses were chosen to represent market norms Medium. This is an example of a typical religious shop that retails communion wine as a part of their product line. Small. This encapsulates on site communion making wine activities. Table 2: Communion Wine Competitors at the smallholder, medium enterprise and large importer levels

6 Company Location Size/ Capacity Importers (Ceres) Ghana-wide Large. Imports products from abroad. Local producers that have achieved scale Smallholder juice producers Ghana-wide Ghana-wide Medium. Supply for products and production procured locally and had gautnteed reliable distrubtion lines and markets Small. Produce for a local market and a seeking scalability *Fruit Processors & Marketers Association of Ghana (2016) Government Activity and Policy Implications for the Sector The government supports smallholder producers, including organic juice and communion wine specialists, through small grants. To supplement the funds given by the government, partner organizations offer training programs, however, support is limited and inconsistent due to the size of the niche industry. Euninuk has been the recipient of such small grants and extensions of support financial and educational initiatives. The owner and founder, Eunice, maintains a relationship with these organizations and with the Ministry of Agriculture local contact, however, does not rely in government support to aid her in growing her business. Section II: Euninuk Within the Industry Company Specific Model Euninuk Ventures is currently targeting the gap in the communion wine market by becoming a primary producer with scalable operations. As Euninuk sells to the market at a lower price than large importers and

7 local Anglican shops, the business provides a competitive solution to local parishes. The strategy of Euninuk is to grow and effectively produce large amount of communion wine to sell to the majority Christian population of Ghana at a low price. Euninuk has currently reached the maximum production capacity of its communion wine products. This includes selling to a network of external parishes and supplying the storefront that belongs to the business owner. As production is primarily manual, Euninuk Ventures faces difficulties keeping up with the ever-growing demand for locally produced communion wine. Expansion and investment in mechanization of selects stages along the supply chain would enable Euninuk to grow to satisfy the need of the rapidly expanding market for her innovative, unique product. Currently, Euninuk Ventures employs three women and has explicit intention to grow this number as a part of the growth strategy of the business. In addition to expanding the number of individuals that the business employs, the owner of the business Eunice, looking to grow her investment portfolio. Her business has reached a stage where returns are being sustained. She is looking to increase production, achieve scale and continue on her track of proven success as a leader and entrepreneur. In order to expand the business, Euninuk must to expand to meet the market demands for the communion wine. In order to grow the business and see increased profit, Eninuk will need to: Invest in mechanization to reduce the time constraints of manual labour to meet the demand of the growing communion wine market

8 Develop a branding strategy to promote the Euninuk brand and expand market Supply Chain Analysis Communion Wine Secure ingredients for concetrate from local trader Mix ingredients along production line Bottle paroduct manually and attach labels Transport wine to storefront or to parishes known to the owner Supply Chain Analysis Organic Juice Secure organic fruit input from farmers Tranport fruit to local store front Blend fruit for made to order juice Transact with cutstomer Section III: Impact of MBC Accelerator Program Impact of MBC Accelerator Program In the 6-month MBC Accelerator program, management teams of SMEs in agribusiness improve their skills and capacity to solve their day-to-day business challenges as well as to access resources for growth. Our training model combines practical classroom workshops, individualized coaching, a competition for real investment and technical assistance for maximum impact. -MBC 2016

9 The MBC accelerator program has played a valuable role in promoting the success of Euninuk. In 2015, Eunice, the founder and owner of Euninuk, took part in the MBC Accelerator program with the goal of improving her management capacity and to grow her business to promote employment of women in her community. Similarly to her peers, Eunice reflected on the MBC Accelerator program as a key means for connecting with other innovative entrepreneurs in her community. In addition to creating an ecosystem of entrepreneurs, Eunice reflected that the greatest impact of MBC Accelerator was the skills development sector of the program. In particular, Eunice reflected on the MBC Accelerator program as a well balance program that makes use of both classroom session and one-onone follow up with a coach. The coaching aspect of the program, Eunice states, is what makes the MBC program unique. With the help of a coach, understanding of the how the concepts in class apply to our individual businesses and needs is realized. The business skills Eunice attained from MBC s accelerator program have led her to believe that financial accounting are fundamental to driving decisions in her business that will lead to success. Crafting and accounting strategy has been an area that Eunice has chosen to focus energy on. As a result, bookkeeping tools are becoming central to Euninuk s business and will only be used more rigorously in the future to drive decisions. As a high potential business investment, Eunice stood out amongst her peers and was awarded for her innovative business plan by winning a specialized technical assistance package. This package gives Eunice

10 access to our experienced consultants to systematically analyze each stage of her business model to ensure that the business grows to achieve long-term goals, facilitate scalability and, ultimately, promote Euninuk as the premier brand of communion wine on the Ghanaian Market. Future for Euninuk Ventures Eunice is keen to grow the company and is ready to undergo restructuring to achieve larger goals. In the next five years, she hopes to connect with distributors to deliver Euninuk brand communion wine across Ghana and plans are well underway to begin exporting to Togo and Benin. I am ready to grow my business and determine the best way to go about that. This is the first product of its kind and I cannot keep up with the demand -Eunice, Owner and founder of Euninuk Ventures, 2016 Notably, Eunice shows an outstanding sense of social responsibility and dedication to her community. She wishes to continue promoting employment opportunities for women. By growing her product she will be able to realize her goal to create an impact in her community. Sources: Kleemann, L. (2016). ORGANIC PINEAPPLE FARMING IN GHANA - A GOOD CHOICE FOR SMALLHOLDERS? The Journal of Developing Areas, 50(3), Retrieved fromhttp://ezproxy.library.dal.ca/login?url= l.ca/docview/ ?accountid=10406 CIA World Factbook. (2015). Field Listings:: Religion. Ghana. Retrieved from Costinot, A., & Donaldson, D. (2012). Ricardo's theory of comparative advantage: Old idea, new evidence. The American Economic Review, 102(3), doi: Ibrahim, M., Musah, A., & Abdul-Hanan, A. (2015). Beyond Enforcement: What Drives Tax Morale in Ghana?. Humanomics, 31(4),