Cheese is expected to grow well over the forecast period, following on from poor growth over the review period caused by a weak economy between 2015 and 2017 and by a steep depreciation of the local currency in 2016 which caused sharp unit price increases. Growing disposable incomes as the economy returns to strong growth would help to drive demand for what is not considered an essential product in Nigeria.
Growth of cheese is also expected to be driven by an increased presence in retail outlets such as supermarkets, hypermarkets and independent small grocers (which increasingly stock Western-style products). Growth of modern retail helps increase the visibility of Western foods such as cheese, introducing them to new consumers.
Spreadable processed cheese is expected to see the best performance in cheese over the forecast period. Brands in this category only began to be available in significant quantities from 2015 and so it is growing from a low base, with its greater novelty attractive to consumers.
Cheese in Nigeria is dominated by Lactalis International Snc through its Président brand, which is widely available at key modern retailers, such as Shoprite and Spar. It also benefits from its first-mover advantage through which it has gained brand recognition.
The Laughing Cow and Happy Cow are the best performing brands in cheese, being spreadable processed cheese brands that were only launched in 2015 and so are growing well from a low base. Their unique wedges help make them more interesting to consumers than standard processed cheese brands such as Président.
Standard-priced brands currently dominate cheese. On the one hand, it is important that brands have low import prices so that importers do not feel they are taking big risks to bring in products that may not see good sales.
With strong population growth, particularly among children and young people, drinking milk products in Nigeria is expected to grow well over the forecast period. Milk, in particular, still sees low capita sales in Nigeria and so has scope for strong growth, particularly with manufacturers emphasising the need to prevent nutrient deficiencies such as calcium.
Powder milk, which dominates drinking milk products, is expected to continue to drive sales of drinking milk products, recording the fastest growth despite being more mature than other categories. A growing population is increasingly demanding greater nutrition through milk and powder milk offers convenience as well as affordability.
The consumption of non-dairy milk alternatives – consisting of soy milk – is expected to continue to grow well due to its novelty, the belief in its health benefits (such as high protein), a high increase in visibility and the marketing of brands such as Vitamilk, which is widely available. There is also increased demand for lactose-free milk, which soy milk provides.
FrieslandCampina WAMCO Nigeria leads drinking milk products in Nigeria by virtue of its ownership of the strong Peak brand, which leads in powder milk. Peak has strong brand equity backed by widespread distribution.
Kneipe Nigeria Ltd was the best performer in drinking milk products in Nigeria in 2017 and 2018. The company’s powder milk brand, Dano has performed very well since 2010 when its distribution was taken over by Multipro Enterprise Ltd, the very successful distributor that has made the Indomie noodles brand a household name in Nigeria.
Companies are increasingly looking for more direct forms of advertising, particularly as margins have been squeezed due to the impact of the economic stagnation of 2016/2017. Therefore, they are expected to utilise cheaper methods of marketing their products alongside orthodox advertising.
Yoghurt and sour milk drinks is expected to perform well over the forecast period as it recovers from the negative impact of a slow economy in 2015-2017. The category also has much scope to expand from popular unbranded, cottage products to branded products.
Drinking yoghurt drives the overall category, and is expected to continue to grow well over the forecast period. This is the kind of product traditionally favoured in Nigeria through local products such as “Kunnu”, and in being branded and sold in both traditional and modern retail outlets, it is experiencing fast growth.
Spoonable yoghurt (consisting of flavoured yoghurt and plain yoghurt) is also benefiting from desire for novel tastes and westernisation, with modern retail channels of supermarkets and hypermarkets helping to make products more visible. The harsh depreciation of the local currency in 2016/2017 had made the category suffer a steep decline due to high import costs, but it is expected to recover over the forecast period as disposable incomes increase with a recovery of the economy and as the exchange rate stabilises.
CHI Ltd led yoghurt and sour milk products in 2018. The company operates an effective distribution network nationwide, through which it leads many food and drink products such as fruit juice, and so has ensured strong popularity for its Hollandia brand.
Ranona Ltd, through its Blue Boat Fresh Yo brand, was the overall best performer in yoghurt and sour milk products in 2018 in terms of value share gain. This was due primarily to a recovery in production in its factory which had burned down in 2016 leading it to being largely absent from retail in 2017.
Over the forecast period, it is expected that competition will increase as more companies try to tap into the strong and growing demand for yoghurt in Nigeria. One such brand, Dolait Yoghurt, entered the category in February 2018 and aims to gain strong share over the next few years.
In the absence of a liquid milk culture in Nigeria (largely due to the poor electricity supply), 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 steady demand.
Other dairy is expected to grow strongly over the forecast period, driven by condensed milk. Since condensed milk still provides a large amount of Nigerians’ milk needs, population growth will be the main driver, while the continued availability of smaller pack sizes will ensure low-income consumers can consume the product.
The only other category in other dairy is shelf stable dairy desserts, which is a niche category in Nigeria, only being introduced in 2010 and consisting of ready-to-eat custard. Since the Nigerian population tends to use custard as a dessert, the availability of ready-to-eat variants (which are made up of custard mixed with milk) appeals to busier consumers and so the category is expected to perform well over the forecast period.
FrieslandCampina WAMCO Nigeria Plc dominated other dairy in Nigeria in 2018. Its Peak brand is the dominant brand in condensed milk in Nigeria, the largest category within other dairy.
CHI Ltd’s Hollandia brand has seen good success in challenging the dominance of Peak in condensed milk, cutting into its share over the last five years. The price of Hollandia was not increased during the height of the economic recession in 2016 and when it was finally increased it was at a lower rate than most of the competition.
As Hollandia’s success has shown, pricing is expected to be a key determinant of share over the forecast period, and so companies would strive to maintain low-price alternatives, such as smaller pack sizes, for low-income earners. Competition is expected to become even more fierce as more companies react to the success of CHI Ltd in stealing share from Peak by introducing their own price-competitive variants.
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Discover the latest market trends and uncover sources of future market growth for the Dairy industry in Nigeria with research from Euromonitor's team of in-country analysts.
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This industry report originates from Passport, our Packaged Food market research database.