Also known as groundnut oil in Nigeria, vegetable oil is one of the most used cooking ingredients in Nigeria. From its use for cooking to other things in the kitchen and even outside the kitchen, vegetable oil serves a lot of purposes.
This made the demand for the oil very strong across every state in the country. As per that, the vegetable oil business is a very lucrative business that can be started anywhere in Nigeria.
The business is very easy to start, it can be started in many ways, and all make a lot of profits. From starting small to expanding, anyone can start a vegetable oil business in Nigeria and make money. However, you need to know what it entails before venturing into it.
That is why we’ve come up with this post to show you exactly how to start a vegetable oil business in Nigeria. Not only that, but you’ll also discover the cost of starting, the realistic profit margin, how and where to buy and sell, and so on.
Are you ready to know all that? Let’s get started then!
Vegetable Oil Business Ideas in Nigeria
The vegetable oil business in Nigeria involves the buying and selling of vegetable oil popularly known as groundnut oil in Nigeria. This business can be approached in many ways including:
Read Also: How to Start a Foodstuff Business in Nigeria
Vegetable Oil Distribution Business
The groundnut oil distribution business in Nigeria involves buying large quantities of vegetable oil from the producers and selling them in gallons to retailers, and sometimes final consumers such as restaurants.
There’s a lot of money to be made by becoming a vegetable oil distributor in Nigeria. However, it is capital-intensive. That means you need a lot of money to start the business this way.
Vegetable Oil Retailing
Vegetable oil retailing involves buying groundnut oil from distributors and then selling in small quantities to final consumers. Starting the business this way doesn’t require much capital. You can also make a lot of money as a vegetable oil retailer in Nigeria.
Vegetable Oil Production
Although it requires a lot of money, and oil production knowledge, producing vegetable oil is the most profitable way of approaching this business in Nigeria. It involves processing, and packaging vegetable oil, and then selling to distributors, and sometimes retailers or even final consumers.
You can start a groundnut oil production business both on a small scale and a large scale. Starting on a small scale involves processing vegetable oil locally with the use of mortars to bring the oil out of groundnuts.
While starting on a large scale involves the use of advanced machinery to produce and package vegetable oil.
Is Vegetable Oil Business Profitable in Nigeria?
Yes, the vegetable oil business is very profitable in Nigeria. Although the profitability varies depending on the type you wish to start.
The business is profitable mainly because of the daily increased demand for groundnut oil. Since it is used for cooking, it would be hard for people not to add it to their list while shopping for groceries/foodstuffs.
Like I said above, the profitability of a vegetable oil business is based on the type. The profit margin you’ll get as a producer may differ greatly from what you’ll gain as a distributor or retailer.
Regardless, since the price is not usually stable, the profit margin may not be certain, but you can gain anything from 20 to 50 percent per gallon of vegetable oil sold. Keep in mind that location may also affect the probability of the business.
What is the Capital Needed to Start a Groundnut Oil Business in Nigeria?
The capital needed to start a vegetable oil business in Nigeria varies based on the type you want to start. Starting as a distributor or manufacturer could be capital intensive, as you’ll need to invest in a lot of equipment to run the business.
On the other end, as a retailer, you just need little money to get the business off the ground, as majorly, what you’ll be using for is the purchase of vegetable oil.
If you want to start a vegetable oil distribution business in Nigeria, you’ll need at least 300,000 naira as capital. While as a retailer, you can start the business with as little as 5,000 naira, as one gallon is okay to start with.
The vegetable oil production business can be started on both a small scale and a large scale, so the capital varies. On a small scale, you can start the business with less than 100,000, while on a large scale, you’ll need 500,000 to millions of naira to get the business off the ground.
How to Start a Vegetable Oil Business in Nigeria
1. Learn About the Business
The first step in starting a vegetable oil business is to first learn about the business, and get to understand every little detail on how the business is operated in your area, and what moves the vegetable oil business market globally.
Learning about the business varies depending on the type you want to start. If you’re looking to start a vegetable oil production business, you’ll need to acquire the processing and production skills. Also, find out the requirements to start a vegetable oil production company in Nigeria.
While understanding the business as a distributor involves making some findings on the best place and time to buy vegetable oil at cheap prices, the price range, and also where and how to sell. Also, you’ll need to identify your target audiences before starting a vegetable oil distribution business in Nigeria.
2. Get Your Capital
While doing your research, you should know the exact required capital to start the type of groundnut oil business you wish to go for. Now, the next thing is to raise the capital to get the business off the ground.
Depending on how you wish to start, sourcing for your capital may vary. As a retailer, since not much is required, you can save up to start the business. However, if you’re looking to start a vegetable oil distribution or manufacturing business and you don’t have enough money, you can seek assistance through partnerships or loans from friends and family.
3. Get a Shop
After raising your capital, the first thing you want to invest in is a shop. Whether you want to start as a retailer, distributor, or manufacturer, you need a shop to start with.
Depending on how big or the type you want to start, the requirements for the shop vary. As a retailer, it would be ideal if you find a shop in a busy area. While as a distributor or manufacturer, a warehouse would be ideal for a vegetable oil business In Nigeria.
4. Arrange for All the Needed Equipment
After getting a shop, the next thing you want to invest a part of your capital in is the required equipment to start and operate the business.
If you want to start a vegetable oil production business, acquiring the equipment needed is where most of your capital will go into, as you’ll need some costly machinery, especially if you want to start on a large scale.
While as a distributor, the equipment needed is not that much, and also not too expensive. Some of the equipment needed include a vehicle, gallons, funnels, and so on.
If you did step one (learning about the business) perfectly, you’ll find out all the needed types of equipment based on the level at which you want to operate, as well as how to get them.
Check Out: How to Start a Snacks Business in Nigeria
5. Source for the Goods
Getting the vegetable oil sold is the next thing on the list. In this step, you need to take your time and look for the best supplier to get your goods from.
As a distributor, your suppliers are usually the manufacturer. There are lots of vegetable oil manufacturing companies you can work with in Nigeria. Though, the requirements for some could be overwhelming. So, you need to find out about the most flexible ones to go with.
Also, while sourcing the vegetable oil to sell, you need to go with the most popular brands (e.g Olive). This will help you grow fast, as you’re giving people their taste.
As a manufacturer, the goods you’ll be sourcing are the raw materials for the production of vegetable oil. While learning how to make the oil, you’ll find out about the goods, and where to get them.
6. Get Started and Get Working
After getting the vegetable oil, the next thing is to start selling as a distributor or retailer. While as a manufacturer, you’ll need to start the production of groundnut oil and package them for sale.
To start making money from the business, you need to make sales. Usually, the quickest way to drive sales as a vegetable oil seller in Nigeria is to market your product.
This can be done in many ways including advertising your vegetable oil on social media platforms like Facebook, Instagram, Twitter, and even WhatsApp Status. Word of mouth is another effective way of promoting your groundnut oil in Nigeria.
As a distributor, you can walk up to restaurant owners, foodstuff, and groceries store owners, and propose to supply them with the best quality vegetable oil at the cheapest price. With a good offer, you should be able to get tons of customers this way.
The vegetable oil business in Nigeria is a very lucrative one to venture into regardless of your location, gender, and even capital. The profit margin of the business is juicy, and it also moves fast on a daily basis.
I believe a post on how to start a groundnut oil business in Nigeria, will serve as a good beginner guide to start with.