Fuel price hike of January 2012 slows growth in soft drinks consumption
Nigeria’s soft drinks market continued to develop positively in 2012, with all major categories showing robust growth in total volume and current value sales. This performance was underpinned by population growth, rising disposable incomes and other favourable economic indicators, but also driven by new launches, marketing activities and improvements in distribution. However, growth in total market volume sales was down on 2011, and also slightly slower than the review period CAGR. This was mainly due to the elimination of government fuel subsidies at the start of the year, which caused fuel prices to almost double overnight and had a negative impact on consumer spending power. Increasing maturity in some categories and political instability in the north of Nigeria also caused growth in total soft drinks volume sales to slow.
Healthier soft drinks products continue to gain popularity in Nigeria
Health and wellness was one of the most influential trends in the Nigerian soft drinks market in 2012. The impact of rising health awareness among consumers was most visible in the strong performances of the fruit/vegetable juice and bottled water categories. At the same time, rising health awareness bolstered demand for low calorie cola carbonates and non-cola carbonates products. Moreover, manufacturers in all major soft drinks categories continued to respond to this general trend by developing new reduced sugar and sugar-free variants, as well as products that contained more natural ingredients and fewer artificial colourings, flavours etc.
Multinationals continue to lead but domestic companies make gains
Coca-Cola Nigeria Ltd, thanks to its long established history in the country, strong distribution network, and aggressive marketing techniques continues to lead shares in carbonates and bottled water. However, domestic companies are in charge by way of innovation and continue to make gains in the market. La Casera Co, Ltd (formerly known as Classic Beverages Nigeria Ltd) for example, recently introduced the first sugar-free carbonate with real fruit, Latina. The company was one of the first to use PET bottles and has introduced a new 'Ice Feel' bottle to raise the stakes again. Domestic companies also continue to experiment with different flavours tapping into consumer demand for flavours other than cola and orange. Chi Nigeria Ltd still surprisingly leads Coca-Cola Nigeria Ltd in fruit/vegetable juice.
Traditional channels continue to dominate soft drinks distribution
Off-trade channels continued to account for the lion’s share of total soft drinks volume sales in Nigeria in 2012. On-trade soft drinks volume sales grew faster, partly because they were emerging from a much lower base but also because favourable economic conditions continued to bolster the development of the local foodservice market. In particular, the expansion of major fast food chains was a key driver of growth in on-trade volume sales. Independent small grocers remained by far the most important channel in terms of off-trade volume sales, followed by other grocery retailers (traditional open markets, street stalls/kiosks). Supermarkets and hypermarkets made modest gains during the review period thanks to rising urbanisation and the expansion of chains like Shoprite and Spar, which can offer wider soft drinks assortments and more competitive prices than other retailers.
Economic improvements will bolster market development over 2012-2017
The outlook for soft drinks in Nigeria is favourable, with growth in total volume sales over the forecast period expected to be slightly faster than that recorded over 2007-2012. Rising disposable incomes and population growth will continue to underpin the positive development of the entire market, while new launches, marketing activities and improvements in distribution will also bolster demand in individual categories. Economic growth and the growing influence of Western consumption trends will encourage Nigerians to trade up to higher quality and more expensive soft drinks, particularly healthier products. Together with price hikes imposed to offset inflationary pressures, this trend should ensure that growth in total soft drinks constant value sales is slightly faster than growth in total volume sales, and markedly stronger than the constant value CAGR recorded during the review period.
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The Soft Drinks 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 Soft Drinks in Nigeria?
- What are the major brands in Nigeria?
- What potential exists for multinational vs. local soft drinks companies looking to increase market share?
- How have changing social attitudes affected soft drink sales?
- How have sustainability issues; such as environmentally-friendly packaging, legislation on recyclability, or the amount of plastic in bottles, affected the soft drink industry?
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This industry report originates from Passport, our Soft Drinks market research database.