Following the recent increase in Value added tax (VAT) from 5 to 7.5per cent by the Federal Government and the resultant effect on consumers’ spending, Ayoola Foods Limited, manufactural of Ayoola Poundo Yam and other food flour items has assured its customers of actions taken by management to absolve the 2.5per cent VAT increase to maintain stable prices of its goods.
“There are somethings we cannot push to the consumers. I look at it and knowing the situation in the country right now and I know that our prices will affect consumers; so we have absolved that and it has again eaten deep into our profits, but we believe it is better for us to leave it that way than to increase the price,” said Segun Olaye, the managing director/CEO of Ayoola Foods Limited, at the Customers’ Forum 2020 of the company organised annually to encourage and reward its customers.
According to Olaye, the company took the decision to cushion the effect of the VAT increase on its customers noting that, “right now the purchasing power of an average Nigerian is poor; so this is not the time to think about increasing prices because it is better to maintain lower profits and still remain in business,” said Olaye stating that the company spent N114m as incentives to motivate distributors in 2019, which resulted in the recorded 15.8per cent increase in sales under the period.
Speaking further on the Customers’ Forum, Olaye said the annual event was meant to encourage and reward its customers, especially distributors. It is also to intimate the distributors of their performance in 2019 and management plans for 2020. “Today we are going to presents awards to our distributors based on how they perform in 2019,” he stated.
On the effect of border closure on its input, Olaye said it affected the company immediately borders were closed because the company relied on foreign rice for its input. However, the company got improved alternative within, especially in Kastina and Bauchi states.
“In business you have to be prepared for difficult periods and that is what we have done; so, it keeps us going. Local rice is good because they are more nutritious and people have adjusted and we don’t have any complain about it,” said Olaye.
Joy Bakare, brand manager, Ayoola Foods limited said partnership with Nigerian artists has been supportive in pushing its brand, especially in the northern part of the country. According to her, the company relied on its brand ambassadors’ followership. “They believe in our ambassadors and by promoting our brand their followers believe the products must be good.”
On the awards given to the distributors, Bakare said the company is rewarding performance based on how well the brands were promoted by its customers. “When you motivate them; they will be happy and do better, because I believe this year is going to be more difficult than last year based on what we have seen due to the changes in government policies; that inconsistency is affecting businesses.”
SEYI JOHN SALAU
