Gordhon: Every Entrepreneur Must Have Passion

MD/CEO Nestle Nigeria Plc, Mr. Dharnesh Gordhon, shares his insight on ‘Engaging SMEs in the Value Chain of Multinationals’ in the Fidelity Bank Plc SME-sponsored radio programme. It was monitored by Festus Akanbi
Tell us a bit about your history globally and in Nigeria. I am aware that Nestlé also started as an SME.

Yes exactly, it is a wonderful story. In 1866 Henri Nestlé started the company that we have today and it is really about understanding the local environment in the little town called Vevey along Lake Geneva. Henri Nestlé tried his hand at developing and manufacturing various products including mineral water, liqueurs, vinegar, fertilizers, liquefied gas and Portland cement. Not all of his projects were successful – quite the contrary – but he never gave up. Instead, he continued relentlessly to gain experience and knowledge whilst adapting to the ever-changing environment.


The breakthrough came with his Milk Food. Henri Nestlé recognised a need in society and applied the latest scientific findings to develop a suitable product to combat the ranging infant mortality prevalent at the time. The product was marketed with a brand name that has since become recognizable in almost every country of the world. Today, 200 years after the birth of its founder, Nestlé’s activities bear testament to a remarkable continuity. It is a CHF 100 billion business with operations across the world. It is a phenomenal history.

How long have you been in Nigeria?

We started simple trading operations in Nigeria in 1961, and we have today grown into a leading food manufacturing and marketing company so we have been here more than 53 years and that is an incredible history with lots of investments over time. We started off with a simple operation but today we have a highly complex organization.

How does Nestlé currently engage with SMEs, as suppliers, as contractors, as distributors?
 

Yes, you know it is one of the big focal points for us and it really starts with “what is our value in the society?” Of course, it is not just people consuming our products and, yes we believe healthier choices is the right of every consumer and every person and this is what we provide. But more importantly, how can we add value to society. So the development of local businesses, local suppliers is important for us for the sustainability purposes, to ensure that we do get supplies and uplift communities. In short, we do engage SMEs across the value chain. We have many focal areas and I am happy to talk more about them.

You have distributors across Nigeria; many of them are SMEs and some of them have become millionaires by becoming Nestle distributors. How do you engage distributors?
 

Well, today, we have 75 major distributors and below that we have main sub-distributors. It really starts from firstly an interested player being an entrepreneur. They need to have the passion to want to run a business and see opportunities then approach us. What we give them is the model and the assistance on how to capitalize the business. That is, the model to run an efficient sustainable business, so we are happy to help on the skill side, but it really starts with a passion and every entrepreneur must have passion.

How do you engage with SMEs in the agricultural sector?
 

Starting with the farms, we don’t procure directly from farmers, we procure most of our raw materials 

through processes. But it is integral that the farmers are developed. For us it is about, providing education around what pesticides to use, what types of grains and quality of grains that we would like to have in our value stream. So it is a lot about education. And this is a role we believe is important for us, because when we do buy from a processor we want to ensure that we have the right product at the right price.

What are some of the pre-requisites that SMEs need to put in place within their business, before engaging with Nestlé or any other multinational?
 

I will talk about the qualities probably last. The first thing is ethical business standard, making sure that labour practices are right, because we cannot engage with a supplier or somebody who cannot run their business in line with our pre-existing values. And these values are important in business. In order to sustain a business over a period, you need to have clear principles, you need to have values in the way you engage and conduct your business. To us, that is the entry point; and yes, we are very happy to assist in getting the right quality and we are very happy to assist in trying to drive down cost. Such as showing a farmer or a transporter how to run their businesses in more efficient ways because we in turn benefit from them.

So what does it take for Nestlé to certify an SME and get your stamp of approval?
 

For us, quality is non-negotiable, and I personally wouldn’t and I am sure you wouldn’t want to eat something you are not comfortable with how it was produced and its source. So it is really the non-negotiable in our business and although, we want to develop small businesses, we don’t believe that we should lower our quality and standards. Our role is to enable small businesses to improve their quality so that they could one day supply us, or together we can build them. I think the question is really about the way to start a business and the open mind set to say that I am happy to invest in my business together with a company like Nestlé and over time we would educate them on what are the right quality processes.

Does Nestle provide financial support to SMEs, and how do you help these SMEs move up the ladder in terms of standards and quality?
 

If I just look at our distribution network which is probably the standard that we have adopted for a long time with the most success; I will say yes, we will engage with SMEs but together with SMEs, engage with financial institutions to create financing models that make sense. We really start with what is the business and how can the business run in a sustainable way, and then we are very happy to help bridge the financial constraints that some SMEs may have or to engage with financial institutions and I think, it certainly pays. With the scale that we have as a business, considering even supplying beyond Nestlé, as we help to develop skills, that supplier will be able to supply any other company in the country. It is really about building a society and building the knowledge of persons in the industry.

What specific advice will you give to SMEs that want to engage with multinationals especially in the food industry? You are South African and you have been in this country for about a year and you see many opportunities that many of us don’t see?
 

I think that the first thing is to stay focused. Whatever business you want to be in, really understand the competitive set, the landscape for your business and the opportunities but stay focused. I think a lot of people give up too quickly. A lot of people do not sustain a vision over a longer period and put in the necessary efforts, because without perseverance you are never going to get the gain.

Can you just give us a brief history of Maggi, one of your most popular products?
The Maggi brand is the old Nestlé brand that really emanated from Germany. But what is really unique to the Maggi cube in Nigeria is the taste, - the fermented soy taste that it has is a very local taste. And because food is local, it also tells you about opportunities, that even if you belong to the multinational, that being creative, understanding the local content and understanding the people that you want to serve is key. This is the message to SMEs: Understand your customers, understand the consumers that you want to supply to better, and if you have a deeper insight you will be more creative with creating innovative solutions, and it is solutions that people buy.

How do young SMEs tap into the opportunities that Nestlé has for SMEs?
 

I think I will just start by saying it is not about the opportunities that Nestlé has. It is really not about what we are looking for but what your business is and what you want Nestlé to engage with you on. It is not like a job advert that you put up and say yes, we have these opportunities. It is more about the drive that a business must have to want to supply big organizations, like Nestlé.

Are there opportunities for those in the packaging business? How can they go about connecting with multinationals?
 

I think it is really understanding that firstly, does a certain multinational use a product that you are manufacturing or packaging, and then understanding who your competitors are, what is the price ceiling and then approaching the supply chains of these organisations. The suggestion or the advice I will give you is really to understand whether you are competitive, do you have the right quality and for which level? Also, do you have the capacity if you have to engage with a big multinational that may require a thousand of your items or a smaller business that may require a hundred, do you have the capability to supply?

How does Nestlé deal with the issue of engaging new suppliers given strong ties with their long term suppliers?
 

This is an interesting one for us especially because a lot of people assume that companies like Nestlé already have long standing suppliers that meet their demands and have no need for new suppliers. However, in a growth market like this, you will always have opportunities for new suppliers. I can tell you today that I do not have enough suppliers of cassava starch, top quality grains and so on. We are always looking for supply opportunities as we sometimes have to substitute with imported products. There are opportunities for new suppliers to come in as new products get launched in the market. Unfortunately a lot of people have the mindset that you need to be a big supplier to work with big organisations. Also outside the scope of food products, there are many other parts of a business where SMEs can come in, from providing security services to transport or logistics. There is no glass ceiling around supplies.

Is there a way to link producers with processors as Nestlé procures processed products?
 

Coming back to the basics of this programme which is to inform entrepreneurs about wider opportunities and how to go about running a successful business, I won’t be specific about Nestlé but I will say that a good entrepreneur needs to do the ground work of carrying out tailored research around what gap your business will fill and the needs of the companies or customers you hope to satisfy, be passionate about your aspirations and stay focused.

Culled from thsdaylive.com