I have spent the last week in the region around Accra meeting with small-scale pineapple processors. ADVANCE has six offices, each with about six field business facilitators (FBF). I have been working with Collins, the pineapple FBF out of the office in Tema, the main port town a half hour outside of Accra, the capital city. He put together an association of pineapple juice manufacturers who are all buying fresh pineapple directly from farmers in the area, processing them in small factories with a single assembly line and a few employees. There is a actually a huge market for fresh fruit juice in the country. Ghanaians have become more health-conscious in the last few years and are increasingly opting for 100% fruit juice instead of synthetic products.
These pineapple processors have a strong market demand. They have customers who bring their own bottles and private label their juices with these processors. In addition, the processors have their own labels and sell to hotels, restaurants, and markets as far as six hours away. They get their pineapples from multiple different sources. Some have their own farms and all have relationships with local producers. They even buy product from the big exporters to the European Union, who have specific quality standards that, if not met, result in the pineapples being rejected. The processors buy up this excess at a low cost and turn it into juice. The problem with this arrangement is that the major exporters are also juicemakers themselves, so these processors are effectively buying their raw materials from their largest competitor, which makes for a tenuous relationship, at best. For now though, the businesses are doing well. There is one major constraint, however: bottles.
There are no glass manufacturing plants in Ghana, so these processors buy used bottles from companies that collect discarded bottles of Vitamilk and other drinks. They typically hire two women to wash the glass bottles, strip them of their labels, and pack them into crates. But bottles are expensive here. A crate of 24 bottles costs 2.60 cedis. Once the crates have been filled with juiced, labeled, and corked, they are sold for 7 cedis, which gives you an idea of the thin margins here. There is, however, a solution to this problem. Burkina Faso, Ghana’s Canada, also consumes a lot of Vitamilk, but their juice processing industry is much less developed compared with Ghana. There is an enterprising businessman at the Ghana-Burkina border who buys up all of the used bottles from Burkina and imports them into Ghana. It is cheaper to buy them at the border (1.50 to 2 cedis per crate), but the minimum order size is 600 crates. And here is where it gets dark.
If you want to buy from this gentleman at the Burkina border, you have to get there early in the morning to buy his stock. Why? Because whenever a new shipment comes in from Burkina a certain major multi-national drink manufacturer that will remain nameless buys up the entire stock of bottles and proceeds to crush them all. By doing that, the company creates an insurmountable bottleneck (pun intended) in the processing…process. So the machines remain idle until these small-scale processors get enough capital from sales to buy more bottles and make more juice. By sabotaging this crucial step in the manufacturing process, this drink-maker neutralizes its most vulnerable competitors in a tactical maneuver that would make The Greek proud. For those who do not know the Greek, he is the leader of an international crime syndicate in the show “The Wire.” Here is a description:
Despite his calm appearance, the Greek is cunning and ruthless, and only interested in facts that make him more money. Series creator David Simonhas said that The Greek is an embodiment of raw unencumbered capitalism. Anyone interfering in this process is eliminated immediately, and he prefers to leave victims headless and handless to hinder identification.
It is important to remember that the invisible hand of the market is indiscriminate and the realities of capitalism can be cold and brutal. But, this is no time to despair, or to throw up our hands and curse the corporate puppeteers controlling the world. After all, Ghanaians are becoming more health-conscious. So we’ve got the market. It’s only a matter of time before we make it big.