Nigeria Food and Beverage Industry Report 2018

FOOD & BEVERAGE
INDUSTRY-NIGERIA2018
MARKET
INSIGHTS

NIGERIA F&B INDUSTRY REPORT 2018
2
NIGERIA
COUNTRY PROFILE
Lagos continues to be the most
important West African city in terms
of socioeconomic terms, with a GDP
of USD136billion in 2016 making it the
5th
largest economy in Africa
Nigeria’s household market is
experiencing strong urbanisation,
creating good opportunities for many
sectors, particularly fast-moving
consumer goods
With approximately 185 million
inhabitants, Nigeria accounts for 47% of
West Africa’s population and has one of
the largest populations of youth in the
world with a median age of 17.9
Despite economic stagnation, the Global
Retail Index noted Nigeria’s retail sector
made national sales of USD125billion in
2016, the highest retail value in Sub-
Saharan Africa

3
MACROECONOMIC
VIEW OF NIGERIA
In response to Nigeria’s 2016 economic setbacks, the government launched the Economic
Recovery Growth Plan (ERGP) in March 2017. The ERGP set out broad targets ranging
from macroeconomic stability to economic diversification and improving governance.
The primary aim of the ERGP was to reflate the economy through spending in
strategic sectors, like infrastructure, agriculture, solid minerals etc., to galvanise
economic activities and empower the people.
At the end of 2017, the Special Adviser to the President on Economic
Matters, Adeyemi Dipeolu noted the Nigerian economy grew by 1.40
per cent in real terms in the third quarter which is consistent with the
improvements in other indicators.
The business environment has shown upward movement of 24
places in the recently released World Bank’s Ease of Doing Business
Rankings which was better than the target of 20 places specified
in the ERGP.
As one of the leading global rating agencies, Fitch Ratings stated
that Nigerian banks’ ability to access foreign currency (FC) has
improved considerably since the Central Bank of Nigeria (CBN)
introduced a foreign exchange (FX) window at the end of April
aimed at investors and exporters. Fitch forecasts growth of 1.5%
in 2017 and 2.6% in 2018.
The recovery will be driven mainly by increased FX availability to
the non-oil economy and fiscal stimulus, as higher oil revenue and
various funding initiatives have raised the government’s ability to
execute on capital spending plans. In April 2017, the CBN introduced
the Investors & Exporters FX window and gradually introduced further
measures to vastly improve dollar liquidity available.
The Nigeria wholesale and retail industry
which accounts for 16.7% of GDP remains a
lucrative investment opportunity on the back of a
large and rising population with a rapidly increasing
rate of urbanisation.
Nigeria has also seen the development of a market for
luxury goods. The country’s burgeoning middle class is
expected to have consumer spending in excess of USD25
billion by 2020. This is comparable to Mumbai, India’s largest
business hub.
The country’s
burgeoning
middle class
is expected to
have consumer
spending more
than USD25
billion by 2020.

4
FMCG GROWTH DRIVERS
Household spending
Population density
Infrastructure development
Advancing advertising &
marketing
Improving economic landscape
Developing modern retail sector

5
FMCG GROWTH PROSPECTS
Given Africa’s enormous market and the potential for rising income, the
FMCG sector on the continent stands to benefit immensely. The sector
provides either necessities or accessible luxury goods, and the size of
the market is not constrained by income dynamics in the same was as
many other sectors.
African consumers are young and willing to spend. According to a
KPMG report, “Fast Moving Consumer Goods in Africa”, the FMCG sector
on the continent stands to benefit immensely. With food, always being
a necessity, there’s an increase from basic staple foods to a wide range
of products.
More than 400 companies generate at least $1 billion in Africa-
based revenues with brands such as Coca-Cola, Nestlé, and Unilever
enjoying significant market share in their categories. Instead of seeking
to build a presence across entire countries, they’ve targeted the fastest-
growing cities or city clusters-urban centres where per capita income and
consumption spending far exceed the national average.
PACKAGED FOODS
PERFORMS WELL IN NIGERIA
The packaged food industry continued to perform well despite an economic recession in
2016. Growth of the already large Nigerian population, particularly babies, children and young
people, drove categories such as baby food, confectionery, noodles, biscuits and dairy products.
A booming urban population fuels demand for convenient food and drink products such as
drinking yoghurt, pastries and sweet and savoury snacks such as fruit snacks. Lastly, marketing
activities implemented by producers through advertising and the shift in emphasis towards smaller
packaging units also contributed to this boom.
The growth of the population, particularly of young and urbanised consumers, will continue to
be a major driver for packaged foods. In addition, as there is an increase in the formal working
culture as well as of women in such employment, the desire for convenience and easy-to-prepare
foods will lead to sustained demand for packaged products.
GROCERY RETAILERS
Modern grocery retailers continued to grow well in 2016 due to
the increasing number of supermarkets and hypermarkets. Retail
Supermarkets Nigeria Ltd opened five new Shoprite outlets in 2015
and a further four new outlets in 2016, taking its total number
of outlets to 20. Its competitor, Artee Industries Ltd, opened five
new supermarkets in 2016 under its Spar brand. Consumers are
increasingly shopping through modern grocery retailers due to
comfort and convenience.
Retail Supermarkets Nigeria Ltd led grocery retailers with a value
share of 2% in Nigeria in 2016. Grocery retailers is fragmented
because there are numerous small grocery retailers present, and
until Retail Supermarkets Nigeria entered the landscape, there
were hardly any large-sized chains within the channel. Its Shoprite
brand has been popular in Nigerian cities in which it is located,
because of its wide product variety, competitive pricing and good
locations.
Africa’s
continent
is home to
more than
1.1 billion
people and
will account
for one-fifth
of the world’s
population
by 2025.
The development
of modern
grocery retailers
remains in its
early stages,
but the positive
performance
witnessed in
2016 is expected
to last in the long
term.

KEY SECTORS
IN NIGERIA
DAIRY
CONFECTIONARY
RICE, PASTA &
NOODLES
CONDIMENTS
DRINKS

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YOGHURT & SOUR MILK PRODUCTS
Yogurt has increased popularityover the years, particularly drinking yoghurt, as
they have been traditionally available in unpackaged form. Fruited and/or flavoured
yoghurt product derivatives are capitalising from the desire for different tastes and
increased influence of westernisation, with modern retail channels of supermarkets
and hypermarkets providing wider exposure.
CHI Ltd leads yoghurt and sour milk products in 2016 with
a 34% value share. The company operates an effective
distribution network nationwide, through which it leads many
foods and drinks products such as fruit juice, and so has
ensured strong popularity for its Hollandia brand.
Drinking milk
products is
expected to
increase by a
value CAGR of 2%
at constant 2016
prices over the
forecast period.
OTHER DAIRY
In the absence of a steady delivery of fresh milk in Nigeria, condensed milk serves as the major
milk complement for a variety of beverages and foods, such as tea, flavoured powder drinks,
coffee and cereals. It is therefore an important category in Nigeria, particularly as population
growth ensures constant demand. Intense competition among manufacturers striving for greater
sales in the category also helps to boost growth exponentially.
In 2016, FrieslandCampina WAMCO Nigeria Plc dominated other
dairy with a 75% value share. Its Peak brand is the dominant
brand in condensed/evaporated milk in Nigeria, the largest
category within other-dairy. The company and its Peak brand,
because of their long presence in Nigeria, have built a strong,
loyal consumer base which cuts across all income groups.
Over the forecast period, yoghurt and sour milk products are expected
to increase by a value CAGR of 1% at constant 2016 prices. It is expected
that sales will rise due to the convenience of these products.
Other dairy
is expected
to increase
by a value
CAGR of 1% at
constant 2016
prices over
the forecast
period.
KEY SECTORS IN NIGERIA
DAIRY
With strong population growth, particularly amongst
children and young people, drinking milk products in
Nigeria continued to grow well in 2016. Milk currently
sees low per-capita sales in Nigeria and so has scope
for strong growth, particularly with manufacturers
emphasising the need to
prevent nutrient deficiencies
such as calcium.
MILK & MILK PRODUCTS
70%
Market Leader
Promasidor
Nigeria Ltd
34%
Market Leader
CHI Ltd
75%
Market Leader
Friesland
Campina
WAMCO
Nigeria Plc

8
CHOCOLATE
In 2016, chocolate confectionery continued to see growth, albeit
much weaker than over the review period. Sales have been driven
predominantly by modernisation, given the growing number of
supermarkets and independent small grocers in which western-style
goods are displayed on shelves, with a wide range of brands being
available at such stores, including more affordable smaller sized
products.
Mars led sales within chocolate confectionery
in 2015 with a strong value share of 36%. The
company’s brands have a long-standing presence
in Nigeria, with strong visibility in retail stores. These
brands, including Mars, Snickers, Bounty, Twix,
and Maltesers are generally affordable and widely
distributed, thereby gaining strong share.
SUGAR CONFECTIONERY
Demand is particularly strong amongst children, as of
midyear 2016 census 44% of Nigeria’s population was
under age 15. In addition, there is also a strong adult
consumer base thanks to medicated confectionery, with
these products being used to soothe coughs and freshen
breath.
Sweetco Foods led sugar
confectionery sales in Nigeria in
2015, recording a of 39%. The
company’s success can largely be
attributed to its ownership of a wide
range of brands, particularly in the
larger categories of boiled sweets
and lollipops.
CONFECTIONERY
GUM
With current sales rising by 11% - the highest growth rate
within confectionery in Nigeria, gum recorded a strong
performance in 2016.
Wrigley led gum sales in 2015, recording
a value share of 46% due to its wide
range of well-known brands and
widespread product availability in
retail outlets. Local competitors such
as A & P Foods, or brands imported
into Nigeria, such as Superstar, do not
have the range of brands to match and
compete with the multinational.
An important trend expected in chocolate
confectionery is the likely growth of
domestic production and the involvement
of local companies,often in partnership
with overseas players.
Gum is expected
to see a value
CAGR of
1% at constant
2016 prices.
With manufacturers keeping price increases low to
encourage volume sales in the face of competition
from substitute products,volume sales are expected
to grow by a CAGR of 3%.
36%
Market Leader
Mars
36%
Market Leader
Wrigley
36%
Market Leader
Sweetco
Foods

9
ICE CREAM &
FROZEN DESSERTS
Ice cream is growing well in Nigeria driven by the hot weather,
growing population, urbanisation, ongoing Westernisation and
expansion of modern retail channels. Availability and visibility
has developed in retail channels following strong growth in
foodservice, which has helped to introduce the product to
consumers.
Fan Milk dominates ice cream and frozen
desserts in Nigeria, accounting for 83%
of value sales in 2016. The company has
a longstanding presence in the country,
during which it has built distribution
strength through street channels for the
frozen yoghurt Fan Super Yogo brand
through mobile vendors.
CONFECTIONERY
Ice cream and frozen desserts is expected to
show an improved performance and to see a
value CAGR of 2% at constant 2016 prices.
SWEET BISCUITS, SNACK BARS & FRUIT SNACKS
The outlook for sweet
biscuits,snack bars,
and fruit snacks over
the forecast period is
positive,with value sales
expected to grow at a
CAGR of 5% at constant
2016 prices.
Sweet biscuits, snack bars and fruit snacks in Nigeria are
benefitting from increased product variety, with value added
and higher quality products also performing well among the
growing middle class population. During 2016 a wide range of
brands continued to be introduced in stores and received point
of sale marketing support.
The leading player in sweet biscuits, snack
bars, and fruit snacks in 2015 was the
biscuits manufacturer Yale Foods Nigeria,
with a 43% value share.
SAVOURY SNACKS
Nigeria has a strong tradition of home-made savoury snacks, such
as nuts. However, with consumers demanding better quality and
convenience, such products are increasingly sold in branded and
packaged formats.
Biscuits manufacturers Beloxxi
Industries and OK Foods Nigeria led
savoury snacks in Nigeria in 2016,
each recording a value share of
24%. Brands such as Beloxxi Cream
Crackers and OK Deluxe Cream
Crackers have a longstanding presence
and are very popular among both
young and old consumers due to
widespread distribution.
83%
Market Leader
Fan Milk
36%
Market Leader
Wrigley
24%
24%
Market Leader
Beloxxi
Industries
OK Foods
Nigeria
Over the forecast
period,savoury
snacks is expected
to see a value
CAGR of 4% at
constant 2016
prices.

10
RICE, PASTA & NOODLES
Noodles have been gaining in popularity due to the affordability and
convenience of these products. The Nigerian federal government
continues to find ways to limit the importation of rice, because of
the high strain it places on the available foreign currency. Rice largely
remains dependent on imports and thus subject to frequent price
increases.
Dufil Prima Foods Plc, which distributes the Indomie instant
noodles brand, leads rice, pasta, and noodles in Nigeria
with a value share of 22% in 2016.
Rice,pasta and noodles is expected to increase
at a value CAGR of 4% at constant 2016 prices.
The convenience and value which brands in
this category offer consumers should support
growth.
SAUCES, DRESSINGS AND CONDIMENTS
There is significant growth in the categories of stock cubes and powders and tomato pastes
and purées, which are considered essential in cooking in urban areas in Nigeria. Like edible
oils, these products are essential in Nigeria, and so performed well in
2017, despite declines in 2016, caused by the stagnation and high unit
price increase.
Unilever Nigeria led sauces, dressings and condiments in both 2016 and
2017, with an 18% value share. Its Knorr stock cubes brand has gained
tremendous influence in Nigeria over the years, and it has thereby displaced
Maggi from Nestlé Nigeria.
Sauces, dressings
and condiments
is expected to
increase by a
value CAGR of 7%
at constant 2017
prices.
22%
Market Leader
Dufil
Prima
Foods Plc
22%
Market Leader
Unilever
Nigeria

11
TEA
Although Unilever Nigeria has had a dominant share in the biggest tea category of black tea,
Richmond Tea, distributed by FMCG Distribution, increased competition in the category.
Slimming tea and green tea were also on this rise in 2016 as
increasing numbers of consumers interested in products that offer
weight loss and/or offer health benefits.
Unilever Nigeria led tea in Nigeria in 2016 with an off-trade value
share of 32%. Its Lipton brand is quite well known, widely visible
and supported by advertising.
DRINKS
COFFEE
Coffee consumption, which still has low prevalence in
Nigeria, is growing as the population urbanises. With
consumers engaged in busier lifestyles and fixed work
times, coffee has become increasingly important to help
maintain alertness. Growing westernisation has also
contributed to the growth of coffee in Nigeria.
Nestlé Nigeria continued to dominate off-
trade value coffee sales in 2016, with a
staggering 70% share.
Tea sales
nationwide
are expected
to see a total
volume CAGR
of 4%.
Retail volume
sales for coffee
are expected
to increase at a
CAGR of 4%. 70%
Market Leader
Nestlé
Nigeria
70%
Market Leader
Unilever
Nigeria

12
JUICES & SOFT DRINKS
This market grew well in 2016 with 3% off-trade
volume growth, although the growth was slower than
what was recorded, when the off-trade CAGR was 8%,
due to the negative impact of the slow economy in
2016. Relatively cheaper beverages – juices – are doing
well through innovation 5Alive Pulpy Orange (orange
juice drink including orange pulp) for instance, which
has attracted strong sales due to its popularity and
affordable price.
CHI remained the leading brand in juice in
Nigeria with an off-trade volume share of 33%
and an off-trade value share of 35% in 2016.
Coca-Cola recently bought a 40% stake in
Nigerian juice and dairy company Chi Ltd. for
$240 million and said at the time it intended
to take total control within three years.
BEER
Beer performed relatively well in 2016 with total
volume growth of 4% despite what was considered
as an economic downturn, as consumers continued
to move to value-for-money lager (economy lager)
rather than stop consumption altogether in the face
of declining disposable income.
Nigerian Breweries led total volume sales in
2016 with a 65% share.The promising market
has attracted American lager, Budweiser,
considered the ‘King of beers,’ which will
be introduced into the Nigerian market in
2018 as part of a long-term investment by
the world’s largest brewer.
Spirits is projected to
see total volume sales
rise at a CAGR of 5% over
the forecast period. This
growth is expected due to
the increased marketing
activities of distributors
and players.
DRINKS
Nigerian Distilleries led total volume
sales of spirits in 2016 because of its
strong presence domestically and its
wide range of affordable brands. Its gin
and schnapps brands are very popular
amongst spirit consumers in Nigeria, with
Seaman’s Schnapps being a well-known
brand.
SPIRITS TRENDS
Local spirits brands, which dominate spirits in Nigeria, saw good performance in 2016
as depreciation affected the purchasing power of the local currency. Locally produced
gin and schnapps are highly purchased by lower and middle-income consumers, due
to their greater affordability.
Juice is expected
to see an off-trade
volume CAGR of 7%
over the forecast
period. The growth
in population and
consumer desire for
new and more exotic
tastes is expected to
drive growth for the
category.33%
Market Leader
CHI Ltd
33%
Market Leader
CHI
33%
Market Leader
Beer is expected to see
total volume growth of
4%, which is stronger
than the total volume
CAGR of 2%.

13
CIDER/PERRY TRENDS
Cider/perry is a niche category that has not yet caught-on very strongly with consumers, and so it was
impacted by consumers’ trading down to cheaper alternatives, which happened across all alcoholic drinks.
With little loyalty to the few available brands, many consumers moved to cheaper products. One brand that
was expected to perform well was Strongbow Apple Cider, which was launched in 2015, during which it
immediately gained a 21% total volume share.
Distell Group and its Savanna Dry brand led total volume company and brand sales in 2016 with a share
of 76%. This can be attributed to the company’s early presence in the category through which it has built
strong distribution, particularly amongst modern retailers.
This niche
category is
expected to see
a total volume
CAGR of just 1%
WINE
Almost all wine consumed in Nigeria is imported. Mid-priced and
premium wine brands were hit during the stagnation period of
2016.
Ekulo Group of Companies led total volume sales in 2016 with
a total volume share of 41%. The company
is the leading importer of wine in Nigeria
and distributes leading brands in Nigeria
such as Baron Romero, Baron de Valls, B&G
Cuvee Speciale, Don Simon, Escudo Rojo,
Moët and Chandon, Dom Perignon and Pink
Lady.
ENERGY DRINKS
Wine is expected to continue to
increase in popularity, with total
volume sales rising at a CAGR of 8%
76%
Market Leader
Distell
Group
41%
Market Leader
Ekulo
Group
TRENDS
Energy drinks continued to be popular in Nigeria through 2016. On-trade
sales also benefit from a booming night life across the country and the fact
that people use energy drinks to mix with alcoholic drinks for that extra
lift. In fact, energy drinks have been partially responsible for boosting the
sales of spirits in on-trade outlets in Nigeria. Restaurants and fast food
outlets are also key on-trade channels.

14

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