Daily Bread – How to start a successful bread bakery business in Africa’s fast-growing bread market.
By John-Paul Iwuoha, Smallstarter.com
Ever considered one of the bread bakery business opportunities in Africa? You’re about to learn several reasons why you should.
Everyone eats bread. Bread competes against rice and cassava (gari) as the most popular food and a staple in Africa. It has remained a widely-accepted food item because of its convenient and ready-to-eat nature.
Bread is a common food item in many African households and up to 70 per cent of breakfast diets on the continent contains bread.
The size of the African bread market is worth billions of dollars every year and nearly all the bread we eat is produced locally. A bread bakery business is easy to start up and can be run from a home kitchen or a bread factory.
Let’s take a dive into this interesting idea and explore the business opportunities for African entrepreneurs in the bread bakery business…
Why is the demand and market for bread growing very fast in Africa?
According to a recent study, the demand for bread is expected to explode in the coming years. South Africa, Nigeria, Ethiopia, Sudan and Kenya are currently the largest and leading bread markets in Africa. The key drivers of this demand are Africa’s rapidly growing population, an expanding middle class which has more money to spend and enlarging labour force, and increasing rates of migration to African cities and towns.
Africa now has more than 50 cities inhabited by over one million people. By 2020, more than 500 million Africans are projected to live in urban areas and cities.
Statistics reveal that urban dwellers and city people eat more bread than people in rural areas. Given the rapid growth of African city populations, bread is sure to remain a highly sought-after food item by African households.
More than 80 per cent of all imported and locally produced wheat flour in Africa is used by bakeries to produce bread. The rest is used by food processors to make biscuits, cakes, pasta and pasta.
Over the last decade, more bread has been consumed in Africa than maize and rice. Why? It’s simply because bread is more affordable (costs much less than rice, yam and maize).
Bread also appeals to the convenience and lifestyle of most people – it’s an instant meal that requires no further preparation and makes a great fast snack (besides its popularity as a breakfast item).
Many of us may not know this: bread provides more nutrients than any other single food source and is particularly important as a rich source of carbohydrates, proteins and vitamins B and E!
Market opportunities for entrepreneurs who want to start a bread bakery business in Africa…
There are different categories of bread that attract different kinds of consumers in Africa. It’s very important that entrepreneurs understand these categories to help them decide on the type of bread they will produce, the likely competition and the needs of the market.
Plain White Bread
At the bottom of the ladder is the basic, plain and cheap white bread. This variety is very common with low-income earners or people who just want to fill their belly and don’t care about nutritional content.
This type of bread usually comes without any labelling, branding or packaging and very little attention is paid to product taste, quality or hygiene. It’s best described as ‘bread for bread’s sake.’
Popularly known as ‘Agege bread’ in many parts of Lagos (Nigeria), this basic white bread is usually less than the size of a standard loaf and can be consumed in one serving by one person.
Agege bread is normally unsliced and its nutritional content is the poorest in the market.
Some bakers have been found to include unhealthy additives and dough enhancers (like Potassium Bromate) to artificially increase the size of this bread in order to fetch higher profits. Most of these substances are banned in several African countries but their use remains widespread due to poor regulation and low consumer awareness.
More than 50 per cent of bread sold on the African market are of this type and most consumers are drawn to it because of its very low price. As a result, most independent and small-scale bakeries producing this bread make money by selling cheap at high volumes.
There are usually no leading producers in this segment of the bread market and it’s commonly dominated by many small-scale and family-run bakeries.
Nourished White Bread
At the midsection of the bread market are loaves which provide nutritional value to the consumer.
This type of bread usually contains ingredients like eggs, milk, fruits, etc. and generally do not contain unhealthy supplements or additives.
A lot of attention is usually paid to the product’s taste, branding, packaging and overall quality.
This bread appeals to and is targeted at, African middle-class households and customers who are conscious about high food standards, nutritional content, quality and taste. These customers are also willing and very happy to pay extra for this higher quality.
Most families also prefer nourished bread for their growing children. As a result, nourished white bread costs much higher than the plain version on the market.
This segment of the market is dominated by franchise bakeries, industrial bakeries and small independent bakers.
This category of bread refers to wheat (brown) bread, wholemeal bread and other forms of uncommon bread in the market.
Consumers who prefer these kinds of bread do so for lifestyle, health, taste or cultural reasons.
A special bread is usually sold in speciality stores and supermarkets. They cost much more than the plain white and nourished versions and require specialized skills and experience to produce.
Bakeries that produce this bread target niche markets like upper-class residential areas and parts of town with a large population of foreigners.
How to start a bread bakery business – An important checklist
- Prepare a business plan
A business plan is not as scary as it sounds. Even if you don’t intend to source any capital from banks or investors, it is important that you organize your thoughts on paper.
A business plan doesn’t have to be complex or too elaborate, just something to keep your eyes on the big picture. The business plan will allow you to easily identify the obstacles and anything you may not have considered.
Your business plan should consider the prevailing market price for the type of bread you want to produce and how much competition there is. You also need to estimate the profit you’re likely to make in the first, second and third years.
Is it sustainable? Is it worth the time, effort and capital?
It’s usually wise to keep 8-12 months working capital to adequately support a bread bakery business.
If you’re looking for a sample bakery business plan template, I have found a good one you can adapt and use for your own bread bakery idea.
You can view it here.
- You should know enough about bread
Nobody says you must be a master baker to succeed in this business; you really don’t need to. However, you need to know the basics and tricks of the trade if you want to survive in this business.
Sign up for a bread baking course and learn the basics about measurements, recipes, flavours, packaging, branding and marketing. You should not give in to the temptation of thinking it’s enough to just hire a manager and have the bakery make you money.
Ignorance in the bread bakery business is likely to open you up to financial losses and eventual failure.
- Choose a location that’s close to your target market
The types of bread in the African market appeal to different segments of consumers. You must ensure that the type of bread you intend to produce will find a sizeable market in your area.
What kind of people lives around you?
Are they high, middle or low-income earners?
Are the students, single people or households with families?
Are they predominantly young or old people?
If you live in a closely-knit community like a residential estate or a university campus, it may be a great opportunity to run this business from your home kitchen.
Look for newly established or developing suburbs and high traffic locations that have little competition. It’s also important to focus on areas that may not be well serviced, like industrial estates or high-density office blocks where you can draw eager customers.
- Would you need a permit or license to operate?
Depending on your country and location, you may require a permit or license from a government establishment or Consumer Health office to operate a bakery.
What are the requirements and standards for approval?
Would you need to have specific equipment like fire safety tools?
Is there a standard qualification you must obtain to be eligible for a permit?
You must know these requirements in advance and take the necessary steps to ensure you get the approval you need to open your doors to the public.
- You need to use the right equipment
The size and quality of your equipment will depend on how much bread you intend to produce for the market and the amount of start-up capital you have. It’s very important that you get good advice in this regard and invest in robust, appropriate equipment for the harsh African operating environment.
The basic equipment you need to start a bakery business includes an oven, mixer, dough moulds, dough divider, fermentation chamber (proofer) and maybe a bread slicer.
The bread bakery business is an interesting opportunity in Africa…
Because most people WILL eat bread most of the time, the bread business can be a very rewarding venture if entrepreneurs can find a large market with few competitors.
With some creativity and higher quality, a new bakery can easily win consumers over from an established bakery. When properly planned and operated, bakeries can become a rich source of lasting income.
If you believe this type of business will work for you, start working on a business plan and take action as soon as possible.
About the Author: John-Paul Iwuoha
John-Paul Iwuoha is a business transformation specialist and founder of Smallstarter. Through his signature training courses and private programs, he has worked with hundreds of African entrepreneurs and business owners to overcome serious challenges with starting, growing, or turning around their businesses. His work and opinions have been featured in several local and international media, including CNN, Business Day, and The Huffington Post. He was named by LinkedIn as one of the Top Global Voices on Startups & Entrepreneurship. Click here to learn more about his signature programs.
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