Packaged food remains one of the best performing fmcg industries in nigeria
Packaged food is one of the best performing consumer goods industries in Nigeria. Current value growth in packaged food was stronger in 2013 than the CAGR recorded over the entire review period as growth in the category continues to accelerate in line with the ongoing shift among Nigerians away from unpackaged, unbranded food towards branded packaged food as well as general trends such as the rapid growth in the overall population of Nigeria, increasing urbanisation and changing consumer lifestyles. There remains creative innovation in various packaged food categories such as noodles, dairy and bakery as well as strong below-the-line and above-the-line marketing activity, with direct distribution a key to companies winning over consumers.
The rise of modern retailing contributes to growth in new products
During 2013, packaged food continued to benefit from the fast growth of modern grocery retail channels such as supermarkets and hypermarkets, with chains such as Shoprite and Spar prominent. In addition, the number of small independent grocers, which tend to self-label as ‘supermarkets’ in Nigeria despite their small sizes, is increasing. These outlets tend to stock mainly packaged food, generally of Western origin. Nigeria’s modern grocery retailers chains are better equipped to offer products such as chocolate confectionery, which traditionally was very difficult to retail in Nigeria due to the very hot weather and the inconsistent electricity supply. In addition to this trend, there is rising demand for novel, Western-style products among Nigeria’s rapidly growing population, whose tastes are changing, particularly the young population.
Competitive landscape is fragmented with strong performances from local players
Several players compete for share in packaged food, with no major company dominant in the industry. Most of these leading companies are local players such as Promasidor Nigeria Ltd, De-United Food Industries and Yale Food Nigeria Ltd, whilst longstanding Nigerian representatives of multinational players such as Cadbury Nigeria Plc and Nestlé Nigeria Plc also have a strong presence. Foreign-owned brands dominate, however, because it is common for large international companies to form alliances with Nigerian companies to repackage and/or market their products in Nigeria, which lowers the risks associated with entering the industry. It also enables the international company to benefit from the existing marketing and distribution capabilities of the Nigerian company.
Traditional distribution channels remain strong but modern channels are growing
Nigerians traditionally do their food shopping in open markets, included in other grocery retailers, and independent small grocers, which are mainly small neighbourhood grocery stores. Modern channels such as supermarkets and hypermarkets maintained minimal value shares in packaged food in 2012, although the channel developed very rapidly over review period and this trend is expected to continue registering strong growth during the forecast period. These outlets stock a wider range of packaged food than traditional distribution channels, in which sales of unpackaged food are common, encouraging growth in sales of Western style food in particular.
Bright prospects for packaged food over the forecast period
As the population of Nigeria continues to grow amidst high levels of urbanisation, packaged food has very bright growth prospects. However, the incomes of a high proportion of the Nigerian population remain quite low and no dramatic increases are expected in this respect over the forecast period, limiting value growth in packaged food. On the other hand, a small minority of the population, including those involved in real estate development, are set to record strong growth in their incomes over the forecast period, making it more likely that they will demand more expensive types of packaged food. Thus, the increasing sophistication of Nigerian consumers and improving product quality will also be drivers of growth in packaged food over the forecast period. In addition, packaged food items which are fast and convenient to prepare such as noodles are set to continue recording dynamic growth in Nigeria during the forecast period, whilst growth in the number of Nigerian women in employment will also boost demand in categories such as baby food.
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The Packaged Food in Nigeria market research report includes:
- Analysis of key supply-side and demand trends
- Detailed segmentation of international and local products
- Historic volumes and values, company and brand market shares
- Five year forecasts of market trends and market growth
- Robust and transparent market research methodology, conducted in-country
Our market research reports answer questions such as:
- What is the market size of Packaged Food in Nigeria?
- What are the major brands in Nigeria?
- As economic prospects slowly improve, are consumers starting to eat out more and spending less time cooking at home?
- How is private label performing in the wake of retail consolidation and the global economic hangover?
- Do consumers want value for money or added value?
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This industry report originates from Passport, our Packaged Food market research database.