Packaged food continues to perform well in Nigeria
The packaged food market continues to perform well in Nigeria, with strong growth between 2009 and 2014. The growth of the already large Nigerian population particularly numbers of babies, children and young people drives categories such as baby food, confectionery, noodles, biscuits and dairy. A booming urban population - cities such as Abuja and Lagos are expanding remarkably through satellite town growth - fuels demand for convenient food and drink products such as drinking yoghurt, pastries, and sweet and savoury snacks such as fruit snacks. An increase in formal working culture also restricts the amount of time consumers can spend on traditional, unpackaged food products. Finally, marketing activities by producers through advertising and the shift of emphasis to smaller packaging units also helped to boost growth over the review period and in 2014.
Modern retail, modern tastes: Key drivers of growth in packaged food
The growth of modern retail in Nigeria (supermarkets and hypermarkets) coincides with a modernisation of tastes and an increase in better quality, standardised and packaged products, such as packaged vegetable and seed oil (which is an alternative to unhealthy bulk, adulterated oil). These channels tend to stock more westernised food types, such as chocolate confectionery, ketchup, canned/preserved food and frozen/preserved food, and so their growth has gone hand in hand with demand for such products. Even smaller channel types, such as independent small grocers (which tend to label themselves “supermarkets”, despite being too small to be classified thus) are increasing in terms of the number of outlets that store packaged foods that are generally Western in origin.
Packaged food is a very competitive market in Nigeria
The packaged food market in Nigeria is very competitive, with only one company, FrieslandCampina WAMCO Nigeria Plc, holding a value share over 10% in 2014. Multinationals generally dominate except in categories where domestic players are protected by legislation, such as biscuits. Other notable players include Nestlé Nigeria Plc, Yale Foods Nigeria Ltd, De-United Foods Industries, UAC Foods and CHI Ltd. The last few years has seen more foreign companies enter the market through acquisition or joint ventures, particularly in the biscuits category. It is necessary for such large international companies to form alliances with Nigerian companies to repackage and/or market their products in Nigeria. This lowers the risks associated with market entry. It also enables the international company to benefit from the existing marketing and distribution capabilities of the Nigerian company.
Traditional retail is giving way to modern retail
Open markets and kiosks, which comprise other grocery retailers in Nigeria, are traditionally the primary distribution channel for packaged foods in Nigeria. However, their share is declining as governments clamp down on informal retailing and as consumers seek more convenient retail experiences. The second biggest channel is independent small grocers, which are primarily small neighbourhood stores and these are increasing share as open markets decline. Supermarkets and hypermarkets are the fastest-growing channels in packaged food in Nigeria. These channels offer greater convenience in terms of shopping as well as a wide range of packaged food products.
Far from mature, packaged food has plenty of scope to grow in Nigeria
The growth in population, particularly of the young and urbanised, will be a major driver for packaged food. With an increase in formal working culture as well as in the number of women in such employment, the desire for convenient and quickly-prepared foods will lead to sustained demand for packaged food products. However, in the near term the market will be largely mass based, as although Nigerian GDP is growing well, this does not appear to translate into strong income growth for a large proportion of the population. Nevertheless, a segment of the population within the middle to upper classes, often those involved in banking and real estate development, is seeing good growth in incomes and will demand higher-priced products, particularly those available in modern retail channels.
Discover the latest market trends and uncover sources of future market growth for the Packaged Food industry in Nigeria with research from Euromonitor's team of in-country analysts.
Find hidden opportunities in the most current research data available, understand competitive threats with our detailed market analysis, and plan your corporate strategy with our expert qualitative analysis and growth projections.
If you're in the Packaged Food industry in Nigeria, our research will save you time and money while empowering you to make informed, profitable decisions.
When you purchase this report, you also get the data and the content from these category reports in Nigeria for free: