FMCGs ramp up investments as appetite for packaged foods grows

Fast-Moving Consumer Goods (FMCG) firms are expanding their local investments due to a stronger appetite among Nigerian consumers for packaged foods.
Rising population and young demography have raised appetite for sugar consumption, forcing major investors to expand investments to meet projected demand.
Already, Dangote Sugar Refinery is pumping over $2 billion in sugarcane plantations as demand for sugar soars, amid rising prices. About $170 million will go to 17,000 hectares of land in Nasarawa State, according to Abdullahi Sule, managing director, Dangote Sugar.
The sugar maker posted profit after tax of N14.4 billion for the financial year ended December 31, 2016, representing an increase of 29.26 per cent.
Crystal Sugar, Locke Sugar, and Flour Mills, among others, have invested over $600 million into sugar plantations as the economic prospects get clearer.
Nigerians’ appetite for packaged milk in tins and sachets has forced FrieslandCampina WAMCO, producer of Peak Milk and Three Crowns, to pump money into the feeding and the milking of local cows in four areas in Osun State.
Euromonitor International expects the compound annual growth rate (CAGR) of Nigeria’s dairy industry to continue growing, driven by rising population, particularly of children and young people.
Olam International has invested approximately $100 million in the development of animal feed mill, poultry breeding farms, and hatcheries to produce day-old-chicks, located in in Chikpiri Gabas Village, Gwagwada, Kaduna.
Olam Group in Nigeria is a leading agri-business company, working along the value chain from growing and sourcing raw commodities,to processing, exporting and distribution, and the manufacturing of consumer packaged foods.
Nestle Nigeria Plc, a leader in the packaged foods industry, is investing 200 million Swiss Francs ($224 million) in the Nigerian economy since 2014.
Darnhesh Gordhon, the then managing director of Nestle Nigeria, said the FCMG firm had invested over 500 million Swiss Francs ($560 million) in new projects in Nigeria between 2004 and 2014, stressing that the firm would continue to invest in the country on the back of numerous sprouting opportunities .
On the back of strong demography, Flour Mills of Nigeria, through its sugar subsidiary, known as Golden Sugar Estate Limited, is pumping $300 million in sugar production at Sunti, Niger State.
Flour Mills subsidiary, Agri Palm Limited has plantations at Ugbogui and Iguiye, near Benin City in Edo State, and has expanded to 4,000 hectares (ha) of established palm in the first phase of local palm oil production needed to support the upstream needs of the group’s oil refining operations in Ibadan, said John G. Coumantaros, chairman of Flour Mills Group.
Understanding the potential in Nigeria, Flour Mills has thrown funds into packaged noodles, pasta, packaged flour, sugar, golden bites, and packaged fish, among others.
Nigeria’s population is currently about 193 million, with the majority of under-30 population spending a large proportion of their income on snacks, ice cream, pastries, packaged rice and chicken, among others.
The country’s population growth is estimated at 2.28 percent per annum. Over 50 percent of the population are under 30 years, while the middle-class make up 25 to 30 percent of the demography.
Work pressure in cities prevents the majority of working population from having early breakfasts, thereby pushing them into eateries, ‘fast food’ centres and retail stores, where they buy packaged foods.
“Increasing urbanisation and population growth have boosted the growth of Nigeria’s FMCG sector. The outlook across the segments appears stable and positive, despite Nigeria’s challenging economic environment,” says a 2016 KPMG report.
A BMI Research says that the food segment will witness strong growth, driven by the growing middle class and the expansion of mass grocery retail channels in the urban areas. The report shows that food sales cumulative annual growth rate could reach 10.4 percent between 2015 to 2020.
A December 2016 report by Euromonitor International, a UK-based research firm, says Nigerians’ appetite for packaged foods has continued to rise, despite the recession
The growth of retail chains such as Shoprite, Spar, Konga, and Jumia, among others, has further led to the growth of the packaged foods industry.
“A booming urban population – with cities such as Abuja and Lagos expanding remarkably through satellite town growth – fuels demand for convenient food and drink products such as yoghurt, pastries and sweet and savoury snacks such as fruit snacks,” Euromonitor International says.