Introduction to Custard and Custard Production Business

Custard is a popular powdered food product made primarily from edible corn starch, with added colors, flavors, and vitamins. It serves as a nutritious, convenient alternative to traditional meals such as pap, and is enjoyed by people of all ages. Custard is commonly consumed as a breakfast meal or light snack across Nigeria, making it an essential item in many households.

Starting a custard production business is a lucrative opportunity due to the growing demand for packaged food products. With Nigeria’s expanding population and increasing preference for processed foods, entrepreneurs can take advantage of this growing market by producing and selling custard.

Industry Analysis of Custard Production Business

Local Demand

Nigeria’s fast-growing population and changing lifestyle trends have spurred the demand for convenient and affordable food options like custard. Estimates show that Nigerians consume over ₦5 billion worth of custard powder daily. This massive demand cuts across different demographics, from children to adults, making it a stable market for small and medium-scale producers.

Additionally, as more Nigerians become health-conscious, custard fortified with essential vitamins (e.g., A and D) is becoming increasingly popular. The versatility of custard as a quick and easy meal makes it a household staple, further driving demand.

Export Opportunities

There are also export opportunities for Nigerian-produced custard, especially in countries with large African communities, such as the United States, United Kingdom, and Canada. These markets seek traditional African food products, and custard fits into that category. Furthermore, with adequate quality control and regulatory compliance, Nigerian entrepreneurs can access regional markets in West Africa, where similar dietary habits exist.

Step-by-Step Guide to Setting Up a Small-Scale Custard Production Business

1. Conduct Market Research

Before starting your custard production business, it’s essential to conduct detailed market research. Understand your target customers, identify competitors, and analyze market trends. Determine the demand for custard in your region and assess the preferences of potential buyers. This research will inform your business strategy and pricing decisions.

2. Develop a Business Plan

A comprehensive business plan will serve as the foundation of your business. It should include:

• Executive Summary: Brief overview of your business goals.
• Market Analysis: Insights from your market research.
• Operational Plan: Production processes, raw materials, and equipment needs.
• Marketing Strategy: Branding, promotion, and distribution.
• Financial Projections: Startup costs, revenue, and profit margins.

3. Secure Funding

The estimated capital required for setting up a small-scale custard production business is approximately ₦22.1 million, which includes costs for factory rent, machinery, installation, and working capital​. You can fund the business through personal savings, bank loans, or by seeking investment from partners.

4. Choose a Suitable Location

Select a production site that is close to your raw material suppliers and distribution channels. The location should have sufficient space for storage and production activities, with reliable access to electricity and water supply. Proximity to your target market will also help reduce transportation costs.

5. Procure Machinery and Equipment

The key equipment needed for a small-scale custard production business includes:

• Powder Mixing Machine: For mixing edible corn starch with additives (e.g., colors, flavors, vitamins).
• Automatic Powder Filling and Sealing Machine: For packaging the finished product into sachets or containers.
• Digital Weighing Scales: To measure raw materials and finished products accurately.
• Sealing Machine: For manually sealing larger packs.

6. Source Raw Materials

The primary raw material for custard production is edible corn starch, which can be purchased from suppliers in bulk. Other ingredients include food colorings, flavors, salt, and vitamins. Ensure you build strong relationships with reliable suppliers to maintain consistent quality and supply of raw materials.

7. Register Your Business and Obtain Licenses

Before starting production, ensure your business is legally registered with the Corporate Affairs Commission (CAC). Additionally, obtain approval from regulatory bodies like the National Agency for Food and Drug Administration and Control (NAFDAC). Compliance with regulatory standards will not only ensure the safety of your product but also build consumer trust.

8. Implement the Production Process

Here’s a simple overview of the production process:

1. Weighing Raw Materials: All ingredients, including corn starch, food colors, flavors, and vitamins, are accurately weighed before mixing.
2. Mixing: A portion of the corn starch (about 5%) is mixed with all other additives in a powder mixing machine. After thorough mixing, the remaining corn starch is added and mixed for approximately 15 minutes.
3. Sifting: The mixed ingredients are sifted to ensure a fine, smooth texture.
4. Packaging: The custard powder is packed into sachets or containers using an automatic filling and sealing machine​(custard Production).

9. Quality Control

Maintaining high-quality standards is essential for success in the custard production business. Conduct regular quality checks to ensure that the final product meets safety and nutritional standards. This includes testing for moisture content, texture, and consistency. Adherence to NAFDAC and SON (Standards Organisation of Nigeria) regulations is crucial for both local and export markets.

10. Develop a Marketing Strategy

Your marketing strategy should focus on both product quality and convenience. Here are some key approaches:

• Brand Identity: Create a recognizable brand with attractive packaging.
• Local Distribution: Partner with supermarkets, grocery stores, and online marketplaces to distribute your product.
• Promotion: Use social media platforms and digital marketing to promote your custard product.
• Export Strategy: Work with export agencies or distributors to reach international markets with demand for African food products.

Profitability of the Business

The profitability of custard powder production largely depends on the cost of raw materials and production efficiency.

According to our analysis based on an initial production capacity of 500 kg per day in the first year, increasing to 1,000 kg in the second year and 2,000 kg in the third year, custard powder production business demonstrates a strong profitability potential. The projected revenue for the first year is ₦384.3 million, increasing to ₦845.46 million in the second year and ₦1,844,640,000 in the third year. The business is expected to generate a net profit of ₦93.1 million in the first year, ₦271.18 million in the second year, and ₦708.84 million in the third year.

Key Profitability Factors:

• Raw Material Sourcing: Efficiently sourcing edible corn starch at competitive prices will help maximize profitability.
• Production Scale: Scaling up production can significantly improve profit margins.
• Market Reach: Expanding into new markets, including export opportunities, will boost sales and revenue.

Conclusion

Starting a small-scale custard production business in Nigeria offers excellent profit potential, given the high local demand and growing export opportunities. By following the steps outlined in this article, entrepreneurs can establish a successful custard production venture that meets the needs of both local and international consumers.

Do you need more detailed information about custard powder production business? Purchase our Feasibility Report for Custard Powder Production today at a discounted price of ₦20,000! This offer is limited, and the price will soon return to ₦100,000 once we reach our target. The feasibility report provides detailed insights into market analysis, financial projections, profitability insights, and step-by-step investment requirements to help you understand or launch your business with confidence.
Get the report here