Sachetizing LPG to Promote Clean Cooking Fuel Adoption in Nigeria
What if LPG was sold like Coke in a glass bottle?
Disclaimer: My scientific knowledge on the workings around this is very limited. I’m only exercising my brainpower from a product / marketing standpoint.
To sachetize a product is to create a variant more suitable for a broader segment of consumers with low incomes. From milk to detergent, the sachetization model is popular in the FMCG industry; and there’s a growing adoption of this model in the financial services industry too as more companies now disburse micro-loans to consumers with no collateral requirement upfront.
For a market like Nigeria, sachetization of anything seems a no-brainer given the low income population are our vast majority. While there’s a concerted effort by the government and private sector to increase LPG adoption in Nigeria, the switch to LPG still remains an expensive exercise for the masses. Despite that LPG is now cheaper than Kerosene by the litre, a gas cylinder is at least twice the price of a Kerosene stove and the camping gas (which comes with a cylinder and a burner) is not as common in the market compared to its standalone gas cylinder counterpart which requires a separate purchase of burners by consumers, adding an extra layer of friction.
However; with companies like TechnoOil and RunGas enabling increased LPG access through local manufacturing of cylinders, and as new entrants into the sector adopt the marketer-owned-cylinder model, companies that will take a big slice of the pie in the market are likely the ones who sachetize LPG to consumers.
So where does Coke come in?
Unlike soda in PET bottles, Coke (the content) and Coke (the bottle) are separate products in Nigeria. Consumers can outrightly pay for both or they can pay a small refundable fee as collateral should they prefer to leave with the bottle for a later return whenever they decide after emptying its content. In other words, the Coke glass bottle is “marketer owned”.
The fastest moving quantity for Kerosene among consumers in Nigeria is 35CL measured using the Coke glass bottle, with retail price at N100 or ~$0.26; contrast that with the LPG starting at 3KG for N800 or ~$2. Stark difference.
For LPG to truly compete with Kerosene, it needs to be more accessible physically and the price point has to make sense to the average consumer. The good news is, the technology exists to enable LPG cylinder manufacturers and companies looking to control their supply chain adopt the sachetization model.
Commercial grade LPG typically consists of Butane (and Propane, assuming a 75:25 ratio). Already, Butane mini stoves are used in other parts of the world for camping with the gas stored in small 220g canisters; however, I’m unsure if the canisters on the market for mini stoves are refillable or what the safety implications surrounding the use of a refilled canister entail.
But you get the point.
Creating 250g sized marketer-owned refillable canisters to fit into mini stoves mirrors the Kerosene stove experience and will perhaps be perceived as much safer by consumers, given the cylinder is out of view once inserted into the stove.
So instead of an outright purchase of a cylinder or the inconvenience of moving a 3KG cylinder to a depot for a refill, low income consumers only need to replace empty canisters with pre-filled cylinder bottles at a much more affordable price.
And while I understand the unit economics has to make sense, it helps to see that this current approach excludes those who can only afford 1/8 the minimum quantity of LPG at a time.