We won’t increase prices despite 7.5% VAT – Ayoola Foods

Our Reporter

CONSUMERS of Ayoola Foods products won’t pay more despite the hike in the Value Added Tax (VAT) by the federal government from 5% to 7.5%.

Managing Director of the firm, which manufactures Poundo Yam and other flour items, Engr Segun Olaye, said the company will absorb the VAT increase rather than transfer it to consumers.

He spoke last week at the annual customer forum of the firm in Lagos.

Olaye said the firm would rather give up a portion of its profit margin than increase prices owing to the VAT situation.

According to him, “There are some things we cannot push to the consumers. I look at it and knowing the situation in the country right now and I know that our prices will affect consumers.

“So we have absorbed that and it has again eaten deep into our profits but we believe it is better for us to leave it that way than to increase the price.”

According to Olaye, the company took the decision to cushion the effect of the VAT increase on its customers because “right now the purchasing power of an average Nigerian is poor.

“So this is not the time to think about increasing prices because it is better to maintain lower profits and still remain in business.”

The company, according to him, recorded 15.8per cent increase in sales under the period because of several incentives offered to distributors.

The border closure, Olaye said affected the company because it relied on foreign rice for its inputs.

However, the company got improved alternative within, especially in Kastina and Bauchi states.

“In business you have to be prepared for difficult periods and that is what we have done; so, it keeps us going.

“Local rice is good because they are more nutritious and people have adjusted and we don’t have any complain about it,” said Olaye.

Brand manager, Ayoola Foods limited, Joy Bakare, said partnership with Nigerian artists has been supportive in pushing its brand, especially in the northern parts of the country.

According to her, the company relied on its brand ambassadors’ followership.

On the awards given to the distributors, Bakare said the company was rewarding performance based on how well the brands were promoted by its customers.