Dairy Nourishes Africa: Building resilient, inclusive, and sustainable local food systems
Dairy Nourishes Africa: Building resilient, inclusive, and sustainable local food systems
Bain partnered with the Global Dairy Platform (GDP), Land O’Lakes Venture37, and others to help the East African dairy sector grow in an inclusive and environmentally sustainable manner. They created a consortium, Dairy Nourishes Africa (DNA), to spark growth, enhance livelihoods, improve nutrition and food security, and build resilience.
These teams made the industry more inclusive and sustainable
To create DNA, Bain teams took a market-led approach that focused on farmer-allied dairy processors as the linchpin for transformation. The team helped these dairy processors accelerate their growth and secure a more reliable supply of high-quality milk. Dozens of Bainies around the world helped, and were eager to pursue an opportunity that delivers on so many UN Sustainable Development Goals.
These teams made the industry more inclusive and sustainable
To create DNA, Bain teams took a market-led approach that focused on farmer-allied dairy processors as the linchpin for transformation. The team helped these dairy processors accelerate their growth and secure a more reliable supply of high-quality milk. Dozens of Bainies around the world helped, and were eager to pursue an opportunity that delivers on so many UN Sustainable Development Goals.
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Bain Capability Network (BCN)
The Dairy Nourishes Africa team included experts from Bain’s consumer products center of excellence. They helped analyze the dairy processors’ supply and sales data to identify significant opportunities to improve commercial performance, including better routes to market and ways to reach previously underserved consumers.
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Expert Consulting
Bain’s expert program includes people with decades of experience across many industries and capabilities. For this project, experts in consumer products and commercial acceleration contributed their insights and experience to help develop the answer.
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General Consulting
The consulting team applied the full breadth of Bain’s strategy toolkit: developing a market fact base, analyzing company performance, prioritizing growth initiatives, developing sales and marketing tactics, and more. The team also aligned a complex set of stakeholders including dairy processors, smallholder farmer cooperatives, funders, governments, industry experts, and associations.
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New Ventures
The Results Talent Network (RTN) team, which sits under New Ventures, manages a network of experienced outside experts who support Bain case teams. For this case, RTN experts who were already in the region helped conduct local research.
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Research & Data Services (RDS)
Bain’s research team has access to a vast range of data and resources. On this project, they supported consultants in unearthing and analyzing data in primary markets. The resulting fact base helped the client prioritize and make decisions.
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Talent Management
The Bain Advisor Network (BAN) team gathered outside experts to support this case. One of those experts provided a new mozzarella recipe which helped producers improve the quality of their product while also reducing the cost. This allowed those producers to compete with imported goods, improve their margins, and recover from the impact of COVID.
Background
The Global Dairy Platform (GDP), a consortium of the largest dairy companies in the world, sought to transform the dairy sector in East Africa. In parts of this region, malnutrition stunts the growth of one-third of children under five, and millions of smallholder farmers earn less than $5 USD per day. If GDP could raise employment rates and increase people’s access to nutritious foods, they could have a massive impact. To create the change required, GDP engaged Land O’Lakes’s social impact venture arm, Venture37, which had deep dairy expertise and over 40 years of development experience. Venture37 invited Bain to join the partnership because of their longstanding social impact work together.
The three organizations designed and piloted a new strategic approach starting in Tanzania. If that model was successful, they could then roll it out and adapt it to other countries, possibly including Kenya, Ethiopia, Rwanda, and Uganda.
The plan
Many of East Africa’s small and mid-sized dairy processors occupy a fragile part of the market known as the “hidden middle.” They’re often too small to be included in mainstream policy and investment programs and are underserved by commercial lenders and investors who prefer larger businesses. Yet they are also too big to benefit from microfinancing.
These businesses also often find it difficult to secure a reliable supply of inputs, to reach markets, and to hire experts. As a result, they struggle to grow profitably. Yet these businesses, particularly those that intentionally source from and strengthen the capacity of smallholder farmers—a stance known as being farmer-allied—play a critical role in the ecosystem. They provide a market outlet for these dairy producers, who, when successful, provide the region with nutritious, safe, and affordable milk products.
Bain originally articulated this sector transformation strategy in a 2019 report, How farmer-allied intermediaries can transform Africa’s food systems. To put this strategy into action, GDP, Venture37, and Bain launched a consortium named Dairy Nourishes Africa (DNA) and committed to a long-term collaboration to transform the dairy sector.
Just as DNA was poised for implementation, however, the COVID pandemic unfolded. By July of 2020, many food processing businesses were shutting down or scaling back operations, putting workers on forced leave, or conducting layoffs. This impacted the livelihoods of their smallholder farmer suppliers even further.
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How should the product mix and route-to-market evolve as a result of COVID?
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How could they reduce complexity and cost by simplifying their operations and product portfolio?
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What immediate cash generation levers could these businesses pull?
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How should DNA manage cash to ensure on-time payments to farmers?
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What strategic investments should DNA be making today?
The approach
The Dairy Nourishes Africa coalition set out to define its objectives for the next 15 years, conduct country-level diagnostics to identify a starting point, and identify key points of leverage in farmer-processor-consumer relationships. It set out to do this as COVID rapidly unfolded, and processors and smallholder farmers began to need immediate support.
Venture37 provided technical assistance and better access to inputs to help the smallholder dairy farmers continue producing. Bain developed strategies to help the processors increase their profitability and restabilize after having lost so much business in the early pandemic. Some of this work involved go-to-market innovations, like supplying milk and much-needed nutrition to low-income consumers and schoolchildren.
DNA also worked to strengthen the overall dairy sector and raise awareness. A DNA-supported radio campaign designed to increase consumer demand for safe, processed dairy reached 275,000 people during National Milk Week. Bain also delivered training workshops alongside the Tanzania Dairy Board and Tanzania Milk Processors Association which reached 65 dairy processors. These workshops provided tools and practices to help these businesses adapt and recover.
The results
The results from the pilot dairy processor program have been encouraging. “Before Dairy Nourishes Africa (DNA) stepped in, we thought we would have to close in two months,” said the CEO of the dairy processor. “We now can’t tell the story of our business without saying ‘DNA.’” Building upon that success, DNA is now collaborating with the Tanzania Agricultural Development Bank to implement the multi-year Tanzania Inclusive Producer-Processor Partnership (TI3P) program, funded by the Bill and Melinda Gates Foundation.
This has been a multi-year collaboration to bring world-class private sector leadership, technical expertise, and deep experience to build transformative public-private partnerships, and the work is ongoing.
increase in average productivity per cow per day
YoY revenue growth for dairy processor with Covid-19 response and recovery plan
revenue from direct-to-consumer sales, offsetting lost sales from Covid-19
