In 2022, hot drinks manufacturers’ ability to deliver in the Nigerian market was still being affected by the negative impact of the COVID-19 crisis. The devaluation of the local currency and rising inflation, which led to high unit prices, saw manufacturers reducing the pack sizes of several of their key brands in order to sustain growth.
Unit prices in hot drinks increased strongly in 2022 in line with double-digit inflation. This is largely due to the depreciation of the local currency, which made it quite difficult and expensive to import raw materials (and parts for machinery).
Nestlé Nigeria Plc and Cadbury Nigeria Plc continued to lead sales in hot drinks in 2022, with their positions supported by sustained marketing and promotional activities. Nestlé Nigeria Plc remained the dominant player in both coffee and other hot drinks – and the leader in hot drinks as a whole – during the year.
Traditional grocery retailers continue to dominate the distribution of hot drinks in Nigeria. However, they are steadily losing retail value share to modern grocery retailers, as the number of supermarkets and hypermarkets in Nigerian cities steadily increases.
High unit prices and the depreciation of the local currency in 2022 contributed to off-trade volume sales performing better than on-trade volume sales during the year. Prices were notably lower in off-trade than on-trade channels and consumers, whose disposable incomes have been declining, shifted to off-trade channels to make their purchases.
Hot drinks is expected to continue to grow steadily over the forecast period spurred by notable marketing and advertising activity on the part of leading brand owners. A growing population and the expanding formal office working culture will also help to drive growth in the forecast period.
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Hot Drinks
This report originates from Passport, our Hot Drinks research and analysis database.
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