Wednesday, November 29, 2023

BMC has no capacity for market intelligence and analysis

At the height of its turmoil in 2012, the Botswana Meat Commission (BMC) outsourced all commercial activities to a United Kingdom company called GPS Food Group. As a beef value chain analysis action plan that was developed under the framework of the Private Sector Development Programme (PSDP) states, this development left the Commission with no in-house expertise in market intelligence.

In its basic terms, market intelligence refers to the use of multiple sources of information to create a broad picture of the company’s existing market, customers, problems, competition, and growth potential for new products and services. Sources of raw data for this analysis include sales logs, surveys and social media. The plan notes that BMC’s business relationship with the UK company means that the former does not have access to meaningful independent export market intelligence.

“The overreliance on GPS is restricting BMC to directly access market data. All information related to market trends and specific consumer requirements are channelled via GPS,” says the plan adding that after the scaling down of “the inefficient and costly UK branch, BMC Sales and Marketing department has been left understaffed, lacking the necessary skills to open new markets and/or develop new products.”

Based in an Essex town called Loughton, GPS now acts as BMC’s distributor in export markets. The company, which has a similar contract with MeatCo of Namibia, provides global procurement, supply chain management, logistics, and marketing services for meat protein products. It offers beef, lamb, pork, poultry, and meat protein ingredients for retail, wholesale, foodservice, and manufacturing sectors. It is paid by way of a fixed percentage commission on the sales it generates. GPS’ principal responsibilities are: export market penetration and diversification, and selling available inventory into those markets; receivables from the customers they sell to; assisting BMC with product improvement and production planning capacity develop┬¡ment to help BMC achieve its market focus strategy; promoting BMC products in target markets; and supplying BMC with market data and information.

The PSDP plan recommends that BMC should strengthen its marketing department to manage the relationship with GPS, closely following the marketing and sales efforts by the agent to develop the brand and increase exports to the existing export markets assigned to GPS; continuously benchmarking export prices against countries in the region to achieve best possible prices for farmers; seeking, identifying and developing new markets for existing or new products, including processed meat; and  seeking, identifying and developing new products for existing of new markets, including processed meat. Overall, the plan stresses the need for BMC to improve its independence and become more self-reliant in market intelligence and analysis. GPS’ contract with BMC does not give it exclusivity in any market and BMC is free to find its own customers for direct supply. The length of GPS’ engagement is dependent on performance. 

The scaling down of BMC’s UK branch took the form of reducing staff significantly, leaving the branch with only four accountants. The plan says that as a result, BMC has notably reduced its ability to gather valuable market intelligence data: “At the HQs level, BMC’s marketing department lacks the skills and resources required to reach out to international clients across geographical regions.”

The plan adds that reliance on one outsourced export agent presents a range of risks, including potential disruptions, loss of control over customer relationships and sub-optimal realization of national objectives

“Similarly to developing a country diversification program, BMC as the sole national ex┬¡porter, should strongly consider developing a strategy that would extend its export sales agency network. These agencies do not necessarily have to be external companies like in the case of GPS, but BMC could benefit from strengthening its sales and marketing team to explore and develop new markets in Africa, Europe and beyond,” notes the plan which was developed by quartet made up of Subhrendu Chatterji (team leader),  Agapitos Chatzipetros, Stephen Ghanie and Christopher Tsopito.

The plan stresses desperate need for BMC to systematically develop market intelligence gathering capacity by strengthening its sales and marketing function and investing in appropriate systems and training. It suggests that the latter should be done through increased staffing with relevant skills, training and investment in appropriate systems.

“The im┬¡portance of the strengthened function needs to be recognized through a change in the organization structure. Ideally, this function should be discharged by a self-contained corporate department, reporting directly to the Chief Executive Officer. Currently the marketing function reports to the Chief Financial Officer,” the plan notes.

The analysis found the absence of a research and development (R&D) function within the Commission to be as detrimental to its fortunes. To that end and in reversal to what it suggests with developing in-house market intelligence capacity, the plan says that the Commission should establish an R&D function to test different specifications and secondary processed products: “In addition to in-house capacity, and especially at early stages, BMC should outsource some of its R&D activities, for example to the National Food Technology Research Council on secondary processed beef and [the Botswana University of Agriculture and Natural Resources] on less applied areas.” 

The Ministry of Agriculture’s Department of Agricultural Research, which is the main government entity responsible for research in the beef sector, is identified as a potential partner. The Department’s research agenda is principally focused on areas such as breeding stock and entails very little research available in areas such as the technical and economic implications of the adoption of technology and the economics of different models of farming. The plan says that limited coordinated efforts have been invested into understanding how the FMD virus behaves in the Okavango Delta ecosystem as well as how it is transferred and spread amongst the cattle and wildlife populations.

In the future, diamonds will contribute next to nothing to the GDP and it is hoped that the private sector will become Botswana’s engine of economic growth. With that in mind, the beef value chain analysis was undertaken “to identify bottlenecks and constraints, especially related to the competitiveness of Small, Micro and Medium-Enterprises (SMMEs) and access to international markets, as well as to propose an action plan to alleviate such constraints.” The study was the first of a series conducted under the framework of the PSDP which is being implemented by Business Botswana.


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