AREA CONSUMIDORES nigerianos



Economic Note

THE NIGERIAN CONSUMER SPACE: How large in the market?

The Nigerian consumer market is estimated to be worth N14.7 trillion, the food and drinks (including alcoholic) is the largest composite of the Nigerian consumers spending on goods and services. Key drivers of the consumption in the country include:

 Strongdemographics:anestimated168millionpeoplewhichplacesitasthe8thlargestcountryintheworld by population and is expected to be the 4th largest by 2050 according to World Bank forecasts. This implicitly suggests its potential to consume food and other goods and services; we believe political instability and misuse of resources in the past have been responsible for its underperformance relative to the leading economies. Given the country’s current disposition and growing democracy, we think the country is poised to join the league of the world’s largest economies – which fundamentally is also a function of the size of its growing population.

 Higher income levels: high income levels which would continue to rise over the long term driven by strong macro-economic growth and improvement in infrastructural development which will induce a private sector led economy.

 Highurbanisationrate:therural-urbanmigrationfigurewas52%in2010,andisexpectedtogrowto56%by 2015.

 Westernizationandinnovation:WebelieveWesterncultureisrapidlyinfluencingtheconsumptionofgoods and services in Nigeria, particularly at the higher end of the market. This has forced the introduction of certain meals such as pasta and noodles – which are not of Nigerian origin, but are increasingly being demanded across social classes. Within the soft drink and alcohol segment, items such as smoothies and champagne are making remarkable progress in the market place based on our channel checks. Innovation among consumer companies is also playing a very important role in increasing the appetite for food & drinks. One of the most recent trends is the packaging of consumer products in smaller units using 5ml/5g sachet.

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FOOD & BEVERAGES SECTOR OVERVIEW

The Nigerian Food and Beverage industry in conjunction with the underlying Agricultural Sector bears the respon- sibility of feeding a populous and developing nation and holding the single largest portion (>42%) of economic and trading activity. The Industry has shown strong growth over the last 10 years coming of the heels of a relatively stable economic climate. Changing demographics – greater number of people migrating from rural to urban areas, more women working and more children attending schools – have contributed to the thriving demand for the Industry’s products. The Industry’s products are fast becoming an essential part of the national diet, particularly in the urban areas. The Food and Beverage industry in Nigeria is at the fore in the manufacture of dairy products, hot beverages, seasonings, convenience foods, confectioneries and staple foods such as bread, pasta and noodles. The demand for products of processed foods from Nigerian consumers is estimated to be in excess of N500 billion per annum. The low purchasing power of the average Nigerian consumer, however, dictates that fortunes in the Indus- try are highly dependent on the affordability of products- price and distribution are thus more strategically im- portant than brand building and enhanced quality. The low level of infrastructural development and the tropical climate also accentuate the importance of the shelf stability of products as a factor for success in the Industry.

The focus of spending on “Food & Beverages” comprises has a broad bread/ cereal subset; which represents 21% of the Food & Beverage basket. Relative to other developing markets where the