LATO MILK PRODUCT LAUNCH IN MALAWI MARKET

Lato milk is one of leading companies in processed milk products in Africa especially in East Africa. It has its manufacturing base in Uganda.Lato milk brand is owned by Pearl Dairy Farms Ltd which is a SBU/ Subsidiary of renowned group called Midcom Group. Midcom Group is a multinational group and has a number of businesses in different industries and across many countries in Africa and Middle East.

Lato Milk is a well-established and known consumer brand in East African countries. In Lato Milk’s product portfolio it has a number of skus like –

• Full Cream Powdered Milk( consumer & industrial) – 7.5g, 10g, 15g, 250g, 400g, 900g, 2.5 kg, 5 kg, 25kg etc
• Skimmed Milk( Industrial) – 5 kg, 25 kg etc
• Ghee( Purified Butter) – 500g, 1 kg, 18 kg etc
• Butter oil
• Liquid Milk ( Skimmed & Full cream) – 250 ML, 500 ML etc

In Year 2016, Lato milk was enjoying a market leader position in Kenya, Tanzania and Uganda markets and at the same time eying to capture Malawi market.

Malawi is a land – locked country in east Africa. It is one of peaceful and business friendly countries on African continent-

Most of Malawi population lives in villages, roughly around 12% of population lives in City. Main contributors to GDP of Malawi are tobacco and other agricultural produce.

PDFL (Pearl Dairy Farms Ltd) wanted to initially launch its full cream powdered milk in Malawi market instead of liquid milk & other skus as full cream powdered milk has longer shelf life compared to other skus. So the risk of early expiry of product will be less in case Lato brand takes longer time to position itself in consumer minds.

PDFL go to market Strategy –Appointing a national distributor at a distributor margin instead of incurring initial cost on setting up our own. This was in assumption that exit barrier will be less in case future became unwelcoming

PROFITABILTY AND REVENUE ANALYSIS

• Profitability =Revenue – Cost ( fixed+ variable) is fair
• Expected revenue to grow by 25 -30% per Month for at least a year

SWOT FOR LATO MILK

MALAWI MARKET ANALYSIS

Market Sizing – Through our research total market size for powdered market (sachets & tins) was roughly around 200 tons a month excluding industrial products

Market –Market was divided into two major parts –

• Wholesales Market – These wholesalers sit in three major trade centers of Malawi – Mzuzu, Lilongwe & Blantyre- small retailers come here to buy sachets & a little of 25kg bags- sachets – 150 tons; 25 kg bags –50 tons. This market works on 2-5% gross profit margin
• Modern Trade – Super markets and semi super markets – Middle to upper class go to buy powdered milks in tins roughly 50 tons is this market – This markets works on 17-25% gross profit margin

Value Chain 1 – Malawi National distributor – Super market – consumers (tins)

Value Chain 2 –Malawi national distributor – wholesalers- retailer – consumers

Competition – There are three main competitors in tins markets while 4 main competitors in sachets market –

• Tins – Kerrygold , Classic &Nido – Not much competition as Lato milk quality is high for value of money
• Sachets – Kerrygold, Cowland, BigCow& Good day – Not much competition as value vs price ratio is in Lato Milk favor

Pestle Analysis

• Political – Politically sound country. Though its African country small disruption & glitch are bound to happen from time to time
• Economical – Robust economy as government is striving to give pace to economy. We expect consumers income to go up
• Social – Per capita income is very less though people are aware of milks benefit and consume it in tea/ coffee and in food
• Technological – Not much impact to us from technology as we are using high end technology in milk processing
• Legal – There are two major expenses are while exporting milk to Malawi markets – MRA & MBS & VAT of 16.5 %
• Environmental – Our product is as such which is no harm to environment as well as overall business environment is peaceful

DECISION TO ENTER MARKET

• Selected a national distributor – A well-known national distributor was selected who has a wise and deep knowledge of market & networks. Distributer has all the needed infrastructure for route sales and channel sales across all the three major trade centers
• Appointed country manager – His job was to handle distributor in financial and supply chain matters at the same time on brand building and marketing activities including digital & traditional marketing tool
• Wholesales &modern trade products were selected– Full cream powdered milk sachets and tins for initial entry
• Marketing campaign – Radio, Billboard, in-store –sampling, roadshow, van branding, facebook&Instagram,

Aftermath ….

• As on today Lato Milk is a leading milk brand in Malawi
• It is a market leader in some of skus
• It is known in market as best brand for value vs money