Tasty tomato sauce profits

Armed with impressive academic accolades, one would think Mr Ibrahim Nganizi and his wife Salha would go head-hunting for top-notch blue collar jobs in the corporate world.

But they didn’t. And after their studies abroad, they returned to Uganda to create jobs for themselves and many more others.

Their dream came to fruition when they saw a niche in the processing and packaging of tomato sauce in sachets, a service which was not available then on the local market.

In 2003, the couple put their idea into practice and gave birth to this business under the brand name Macdough Foods Uganda Limited.
Situated near the slopes of Kitintale hill, a suburb of Kampala, the company is well-known to residents at least for the last decade or so it has been in existence as the ‘Tomato sauce’.

Initially, this company set off as a bakery in 2001 but because of the stiff competition in this industry, they changed their business strategy to processing tomato sauce in 2003.

Later they diversified into mango and apple juice, jam and their newest addition to the company is Macdough Plastics, a wing which manufactures packaging materials for the growing small-scale industry.
Because of their enterprise, the company was ranked among Uganda’s Top 100 mid-sized enterprises in 2013. This follows the KPMG 100 mid-sized company survey - an initiative of Monitor Publications and its partners. The survey aims to profile and celebrate Uganda’s best performing mid-size companies.

Inspiration
Having lived and studied abroad, which come with exposure, the couple returned home at a time when the Fast foods industry was booming.

Then, customers were served tomato sauce wrapped in either a polythene bag or they would use a bottle which would be handled by many, rendering it unhygienic.

“With the exposure abroad, things were done differently. Tomato or chilly sauce would be served in sachets and if one wanted more, they would request for another,” Ms Nganizi shares.

The couple realised the business of packaging tomato and chilli sauce was lacking on the Ugandan market, sparking off the idea to get started.

Initially, they would buy tomato sauce from the market, pack it and distribute to supermarkets, restaurants and hotels. This was not sustainable and they did it for a short while.

Ms Nganizi, who handles the food processing wing shares: “We realised that in order to follow the value chain, traceability purposes and protecting the company name, it was better to make our own tomato sauce, pack it in the sachets and then sell it.”
“We noticed that depending on someone else to produce the tomato sauce would leave us at their mercy even when they are not in production yet the demand would be high and the product is not available,” recalls Ms Nganizi.

Packaging the tomato sauce into sachets was not welcomed by fast food restaurants because they were sceptical of the new development.

“People were used to serving their clients sauces from the bottles. But later, they realised that they had no say on how much sauce the customers would use yet with the sachets, one would be controlled. That’s how the sachets were seen as a smart option,” Ms Nganizi says.

Investments
The couple’s savings worth $5,000 (about Shs13 million at the current rate) then were the initial capital investment and it has seen their total investment grow to $1.3 million (Shs3.3 billion) for both food processing and plastics businesses.

“The tomato sauce business has helped us set up the plastics wing to cut back on the costs we used to incur and the balance is sold to the growing SMEs in the country,” Mr Ibrahim Nganizi who manages Macdough Plastics shares.

Plastic wing
Mr Nganizi shares that in order to save on the cost of buying packing materials; they saw a need of investing in this line and also make a profit from the growing small and medium enterprises who would want packaging materials.

“About two years ago, we set up a packing plant with the capacity of making one million pieces per month,” Mr Nganizi shares.

The couple has invested about $400,000 (Shs1.04 billion) in the plastic packaging plant. Here they make bottles in which pack the tomato, sauces plus juices. Then the balance is sold to other SMEs.

Market
They started off supplying all the supermarkets in Kampala with their maiden products -Macdough Tomato and chilli sauce.

Countrywide, their products have spread to all districts and gone beyond borders such as South Sudan, DR Congo, and hopefully soon they will be exporting to Rwanda after acquiring the right packaging material, that is required on the Rwanda market.

December is always their peak season because of the number of people who eat out— those who come back from the diaspora and children who in holidays create a big demand for their products.
“Overall, Ugandans are people who love going out so we always have a market,” Ms Nganizi explains.

Challenges
Taxes on sugar, which is one of the raw materials used in their recipe, are going to affect the business and yet it is difficult to increase on the price of final product.

Ugandans supporting foreign products whose profits are repatriated back to countries of their origin has been a challenges.

They say it is vital to appreciate supporting the local industries create jobs for the locals and support the economy.

Accessing the packaging materials was a challenge in the beginning but now they are producing their packages and this has helped them a lot to save.
Instabilities in the prices of some of the raw materials especially when they are not in season, is the other challenge that they experience.

“Expensive loans at the beginning were a challenge but now banks have come on board to help us. The poor work ethics of employees has always been hard to deal with especially in the beginning,” Ms Nganizi shares.

Future plans

The couple have plans of expanding the food processing plant business to a much bigger area at the Kampala Industrial Business Park-Namanve where they have secured a one-acre piece of land.

Mr Nganizi shares: “We hope if all the logistics are in place by 2015 we shall have expanded to Namanve”.

They also hopeto introduce new products on the market especially in the food processing line like the production of Mayonnaise among other products.

Production
Monthly, they process about 12 tonnes of tomato and chilies sauces, plus the two tonnes of other products they have diversified into products like mango and apple juices.

Because the raw materials for the juices are seasonal, they complement them with the imported mangoes from India and Apples from Kenya when they are not available on the market.
“Importing raw materials for the juices during the period when there is low season at home is expensive but we have no choice but it helps us to keep in business,” admits Mr Nganizi.

They have created jobs for more than 60 Ugandans in both the food processing and plastic businesses.

Processing tomatoes into sauce

Ms Nelly Mugerwa, the production manager of juices, says they process tomato and chilli sauce and jam and their main product is tomato sauce.

“We buy tomatoes from the farmers. Once they are brought to the factory, they are sorted and whatever passes the quality check is taken to the production unit and cleaned,” Ms Mugerwa says.
Then they are passed through the pulping process –which is an automated machine that removes the tomato juices. After this, the tomato juice is pasteurised to increase their shelf life.

“We have a recipe which we use- after adding in the recipe (Corn starch for thickening, preservatives, Sugar, salt and different spices for flavouring) it’s then steamed which leaves no foreign flavors-then cooled for packing into the different shapes ready for the market,” Ms Mugerwa shares.

The tomato sauce takes one-year period before it can expire if not opened and when opened clients are advised to keep the tops sealed and in a cool dry hygienic place.

Quality control
Because there are other producers of similar products on the market, they have been able to overcome that through maintaining good quality. To achieve this, they do regular checks with the Uganda National Bureau of Standards and their products have a quality mark.

This is what has made their products unique and proven to be of quality.
“Every quarter of the month, UNBS experts check whether we are following the quality and standards and this always reminds us about quality because our products are consumed by people,” Ms Nganizi adds.

When they came back, she found out that some Ugandans have poor work ethics.
“I had to drag people to do the jobs they are paid for. Time management was still lacking,” she shares, advising people to be passionate about what they do.

People should work on giving an extra customer service care. “For instance, the way you talk to a customer will determine whether he or she will return,” she advises.

You cannot underestimate the value of being knowledgeable.

“Getting to know a little bit about every part of the business means going an extra-mile. It would cause no harm being a manager opening a gate when the gateman is attending to something else or carrying boxes,” she shares.

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