A Commenter on a previous videocast noted: “ndubuisi ekekwe, I know that Aliko Dangote is a great businessman, but why was he unable to break into the pasta/noodles sector? If he can really pick any sector and dominate it.” I did promise to explain via a video, besides my comment on LinkedIn. (Note: Dangote is still on pasta business; it exited the noodles’)
In this videocast, I explain how the makers of Indomie noodles used the same strategy Dangote Group had deployed across industrial sectors to defeat Dangote Noodles. The accumulation of capability which Dangote Group uses to crush competitors did not work because Dufil Prima Foods (makers of Indomie) did the same thing from electricity generation to production, for its noodles business. With their vertically integrated business, there was no left efficiency which Dangote could exploit to improve quality and reduce price. At the end, an established brand won and Dangote Noodles could not dislodge them. Dangote Group later sold its noodle business to Dufil Prima Foods. This shows a practical model anyone that wants to compete against Dangote Group can deploy. Beware: you need to be very solid!
Please read this brilliant comment on LinkedIn from a Commenter. It strengthens this conversation.
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[Dufil] Prima foods mastered cost value and experience value through mainly the discipline of operational excellence to achieve and exploit leadership advantage by
1. leveraging is assets maximally to boost revenue and financial returns. Ndomie was operating more hours a day, producing more output a day, at less cost than Dangote.
2 Finding different markets to penetrate with their existing assets and boosting the utilisation of the existing assets. Hungryman pack, family pack, breakfast pack etc.
3. It shrank the idle time of its production assets and even used up dormant capacities. That is the formula of [Dufil] Prima foods. Mainly the discipline of operational excellence to deliver cost value and experience value. Just an analyst’s opinion.
[…] this link, we present a case study of a company that actually defeated Dangote Group in its noodles business, […]
Good review. But Indomie Instant Noodles is made by DUFIL PRIMA FOODS PLC; NOT Prima Foods as indicated in a couple of place in your right up.
Thanks. It is updated
G
Unable to connect with your post. Sounds too technical.
Absolutely, it requires secondary school Economics. If you did not attend one, I would recommend you buy a book on Economics. Then, after that, come back and watch it. Good luck. Our audience is largely university graduates. Besides, you can get a friend to explain.
Working at Dangote Cement, I disagree with you.
Indomie Noodles pay crap to their workers, but we are relatively paid better, hence cost on indomie is cheaper. A lot of products in the Nigerian market are produced and sold on the sweat of the Nigerian Worker.
I can agree with you that they have a fantastic route to market, so they load products unto the salesman, but Dangote has a Team for each brand which increases cost of Sales.
A lovely article and I would love to engage you in a chat someday.
Oyinda
Oyindamogold, my piece had nothing to do with salary payment. That is partly irrelevant on the perspective here. The summary is that Indomie Noodles won. You are free to pay your workers whatever you want but unfortunate to you that did not make them better. Competition does not mean only the best paid workers win otherwise we would not have startups doing better than incumbents [startups pay largely nothing to workers]. I am not sure Dangote Cement pays better than Lafarge or whatever but you are winning there. What Dangote does on its distribution is internal [it is your chosen strategy]. In the age of aggregation, I have noted that Indomie Noodle is doing far better in the utilization of its assets than competitors. Please ask your team to attend my workshop in Lagos this Sept https://www.tekedia.com/register-ndubuisi-ekekwes-innovation-growth-workshop-lagos-sept-2018/ We can discuss some of these elements. Or invite us for an in-house workshop