Diversification is the formula of the future for Flour Mills of Nigeria (FMN) as it consolidates its existing presence and rapidly expands into a wide range of diverse sectors of the Nigerian economy.
“We have been able to continually increase and diversify our business because of our success and whatever we get into we ensure that the quality is the best,” says Chief (Dr) Emmanuel A. Ukpabi, the Group Managing Director.
This strategy of entering new sectors takes on fresh urgency as FMN’s competitors try to catch up with the group in its established businesses.
“One just has to keep moving as you cannot remain in one business alone for 50 years,” he argues. “Everybody wants to sell the same product and they tend to cut prices so I think diversification is the key.”
In the food and agricultural products industries, which it knows best from its long experience in flour milling and related activities, FMN is branching out into retail operations catering to the end consumer.
One of the group’s new sectors will be breakfast cereals and snacks, and it is bringing a former standalone pasta company into FMN as a division. Once completed, the company’s new pasta plant will be the largest in the world, according to Dr Ukpabi.
“Many expatriates pack our pasta into their suitcases when they return home because it compares favourably with the pasta made overseas,” he says.
FMN is also moving into sugar refining through horizontal integration by establishing large-scale sugar plantations in the best cane growing regions of Nigeria.
Cane will be initially milled into raw sugar at the plantations and then trucked to the refineries to be finished and packaged.
“We also proudly own the largest animal feed mill in sub-Saharan Africa and we are building a second feed mill to increase scale,” the chief says.
While food and agricultural products remain FMN’s core business, it has naturally diversified into related sectors.
Moving all of its products to market is the task of the group’s Golden Transport division, which operates more than 500 trucks. Another FMN division is the Apapa Bulk Terminal that handles over 3 million tonnes of bulk cargo each year.
Now FMN is launching itself into totally new and exciting endeavours, such as infrastructure development and increased cement production, to fill the supply gap following the government’s ban on imports of building materials.
“Diversification,” the managing director confidently predicts, “will help us give our shareholders a good return.”