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Lustrum Symposium Sustainable Solutions, Focus on Africa. Affordable Healthy Food for the Bottom of the Pyramid (BoP) . Geert Verhoeven Delft, 1 November 2007. Friesland Foods. Multinational company

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Lustrum Symposium

Sustainable Solutions, Focus on Africa

friesland foods
Friesland Foods
  • Multinational company
  • Wide range of natural, nutritional and high-quality dairy products, fruit-based drinks and ingredients
  • Health, convenience, reliability and vitality for consumers are key characteristics
  • Strong position on dairy markets in over 100 countries especially in West and Central Europe, the Middle East, West Africa and Southeast Asia
  • To create value for our owners, the member farmers, in short and long term, by means of profitable international dairy (related) activities
  • To develop, produce and market a broad range of reliable, natural and nutritious dairy products that should contribute to well being and vitality of life
reach the unreached
“Reach the unreached”

“The aspiring poor present a prodigious

opportunity for the world’s wealthiest

companies. But it requires a radical new

approach to business strategy”

C.K. Prahalad and Stuart Hart

“The fortune at the bottom of the pyramid”

Strategy+Business, January 2002

of 6 5 bil people approximately 4 bil earn less than 2 per day




Emerging Middle Class (MOP)



Bottom of

the Pyramid

(Prahalad & Hart, 2002; Hart & Christensen, 2002;

London & Hart, 2004; Prahalad & Hammond, 2002)



Of 6.5 bil. people approximately 4 bil. earn less than $2 per day ...

Saturation of current markets

Population in millions

Purchasing Power

Parity in U.S. dollars

Existing capability; New market

New capability;New market

the poor live in high cost economies

Mumbai, India

Dharavi (Shantytown)

Warden Rd. (Suburb)


Cost of Credit (Annual Interest)

600 – 1000%

12 – 18 %

60 – 75 X

Municipal Grade Water (cu.m)



37 X

Phone Call (per minute)

$.04 - .05


2 X

Diarrhea Medication



10 X

Rice (per kg)



1.2 X

The poor live in high cost economies

Source: C.K. Prahalad and A. Hamond,


bop consumers are a big opportunity for friesland foods

Our challenge is to make this Nutrition (and hence better health)

  • Affordable, Accessible and Available.
BoP consumers are a big opportunity for Friesland Foods
  • Globally more than 4 billion people live at the BoPon less than $ 2 per day
  • Nutrition is a key necessity for these consumers especially for their children (from 0 to 10 years)
  • This is related to a deeply rooted aspiration of parents to give the best to their child(ren)
    • Nutrition, health, education, living standards (clothing, shelter) are some ‘visible’ manifestations of this aspiration.
    • Success of parents is measured by success of their child(ren)
project for bop
Project for BoP
  • The Board of Management fully supports the initiativeto look into possibilities to produce affordable healthy food products for people living at the Bottom of the Pyramid
  • For a solution to be sustainable we strongly believe it needs to be based on economic principles
approach deep listening getting to know live at bop
Approach: “Deep listening”Getting to know live at BoP

Teams in Indonesia, Vietnam and Nigeria

  • visited both urban and rural BoP-communities
    • 1/3rd of the urban population in developing countries lives in shanties / slums
  • had multidisciplinary backgrounds
  • had a multiparty background (local Friesland Foods, Friesland Foods HQ and NGO’s)
  • lived their lives
  • aligned with them
school in nigeria1
School in Nigeria

130 children in one roomAge of children?


overall findings of deep listening phase
Overall findings (of deep listening phase)
  • Life at the Bottom of the Pyramid is hard, insecure and feels like a trap

Many elements influence this feeling of chaos and insecurity and it is very difficult to pinpoint cause and effect of extreme poverty. The teams have all referred to the situation as a revolving circle, a maze where the exit is hard to find. We recognise the following dimensions in this vicious circle…

vicious circle of life at the bop


Hazardous, unhealthy



Lack of

Working capital


Poor Health,

Poor Appearance

Early Aging


No Skills

No Confidence


Lack of initiative

Hard working but

often no job


Lack of LMT


Lack of education


Lack of protection

No Peace of Mind


Social Relations

Gender unequal


Social structures



Vicious circle of life at the BOP
considerations for business model
Considerations (for Business Model)

BoP people avoid governmental, non governmental institutions,

Distrust, anticipated costs, physical distance, need for planning, lack of anticipated benefit, lack of self confidence …

Implication: whereas collaboration with government, NGO, Schools and medical facilities will be necessary to scale up it will not suffice. An extra dimension of bringing the solution to the community, every single day, will have to be build in.

Modern families but disempowered women…

Women are often more entrepreneurial than men. Still: men take up an authority position

Implication: the need for “completing” the family income and the more entrepreneurial pre-disposition make women the obvious target for implementing BOP solutions. This could and should imply an empowerment of women but only to a level where the role of women does not threaten the authority position of men. It is important to look for solutions that are inclusive to both men and women and to portray women as partners

Power to the children

Children have serious responsibilities; are a source of hope to their parents. They have an appetite for learning

Implication: defining children +2 as the target group for using future solutions is one thing. The BOP reality also makes us consider children ( 6-12) a target group to contribute to the solution. Their openness to change and the hope they bring to the parents could make them advocates for changing eating habits. The already existing practice of helping to provide some income for the family could offer opportunities for making them agents of change.

  • Affordable means:euro cents- N 5 to N 10 Nigeria = 3-6- Rupiah 500 Indonisia = 4 € 0,05 per portion- VND 1000 Vietnam = 5
  • Nutrition = filling / tastyFriesland Foods will focus on protein and fortification
  • Organisation. There will certainly be additional costs to reach and service BoP consumer
  • Lower unit price, higher packaging and distribution costs will mean lower GPC. Large volumes will be required
  • Children 2 years + PrimaryYoung Adults Secondary
nutritional deficiencies
Nutritional Deficiencies
  • Macro nutrients
    • Protein
  • Micro nutrients
    • Vitamin A
    • Iron
    • Iodine
    • Zinc
    • Calcium
  • Important for growth and development
  • Amount important
  • Quality important
    • Protein Digestibility Corrected Amino Acid Score (PDCAAS)
    • Composition of essential amino acids
    • Protein of animal origin (milk, meat, egg protein) has high PDACAAS
    • Soy protein has slightly lower PDACAAS
    • Combination of different sources can increase PDACAAS
  • Cost per portion
cost example protein
Cost example protein
  • Serving of 200 ml
  • Protein content of 5%
  • This is 10 g of protein
  • Therefore research for affordable protein necessary
alternative protein sources
Alternative Protein Sources
  • From insects, caterpillar (WUR)
  • Brewer’s grain, Beet or cane pulp, Maize gluten, soy hulls, Locally available by-products
    • Release vegetable protein from cell walls
      • Cellulolases, Xylinases
      • Separation
      • Processing costs will be crucial
  • Bioreactor (enzyme of micro-organisms)
  • Algae production
    • Algae consist of 60-70% proteins, 20% carbohydrates, 11% fats (including essential, polyunsaturated fatty acids), 12 different vitamins (like vitamin B12) and 12 mineral (like calcium and iron)
approach affordable protein
Approach affordable protein
  • Access information on composition, prices, taste, nutrition and modification technologies
  • Contact Technology Partners
  • Set up Technology Development Plan with partners
  • Feasibility tests of processing alternative protein sources into “tasteful nutritious protein”
  • Tasteful = the protein source can be applied in a (dairy based) food product with acceptable taste properties

Findings up to now:

  • If basic material containing protein is cheap then processing is expensive: total cost comparable
vitamin and mineral deficiencies

(254 million

Preschool children)

Blindness / Reduces immune system effectiveness


> 80 million



Mental Retardation

1.7 billion



Mental and physical retardation


Vitamin and mineral deficiencies

Source: ‘WHO’

iron fortification
Iron fortification
  • Important for blood production and cognitive development
  • Bioavailability high as Fe2+
  • Fe oxydises easily to Fe3+ ; results in:
    • Low bioavailability
    • Off taste
    • Colour effect
  • Stabilisation of Fe2+ in food is very difficult (targeted encapsulation technology)
    • Application in dry products easier than in liquid products
friesland foods initiatives
Friesland Foods Initiatives
  • Short term
    • In Indonesia, Vietnam and Nigeria local development projects have started and will lead to market introductions in 2008
  • Long term
    • More research is needed in the area of
      • Affordable Protein
      • Fortification