The potential of the Fast-Moving Consumer Goods (FMCGs) in Nigeria is limited by low level of innovation in the local packaging industry.
This situation hurts sales and profits of major FMCGs in the country as it de-markets their products in both local and international markets.
“When I go to Nigerian supermarkets, I see a lot of evolutions. What I see in Nigeria is thicker packaging. People tend to think that the thicker it is, the more sustainable or better it becomes, but this is not so. It rather means that the polymer that was chosen was not sophisticated,” Diego Donoso, business president, Dow Packaging and Specialty Plastics, told BusinessDay.
A lot of made-in-Nigeria’s over-the-counter products are still poorly packaged with bland colourations and descriptions that make them look inferior to second-rate Asian products, which are better designed and packaged.
A number of packaging firms in Africa’s biggest economy do not follow global trends such as green and smart packaging, digital printing and sensory packaging, which are more attractive to shoppers and environmentally sustainable.
Nigeria also relies mainly on rigid materials for the packaging of its juice, beer, snacks, soft drinks, toiletries, diapers, and over-the-counter drugs, even when the world has moved on to flexible packaging, which is environmentally friendlier, sustainable, lightweight and cheaper.
In several parts of the world, a ten-litre gallon is no more in a thick plastic form, but is in a flexible, transparent shape that allows the consumer to put it into his pocket after use.
Apart from multinationals like Cadbury, Promasidor and Nestlé, among others, many local firms still lag peers in product packaging.
The impact of poor product packaging is that goods produced by Nigeria’s FCMGs firms do not often compete well with products from other countries that are better packaged, with interesting designs and labels. Secondly, FMCG products shipped outside Nigeria are consistently rejected in Europe, the Americas and Asia, on the back of haphazard packaging, thereby raising production costs and hurting top- and bottom-lines.
“Obviously, when they see that our products are not properly packaged, they turn them down,” said John Kachikwu, chairman, Small and Medium Scale Group of the Lagos Chamber of Commerce and Industry (LCCI).
Kachikwu said the current situation arises from a harsh operating environment which does not allow many FMCGs to package their products properly.
Analysts say better packaging promotes impulse buying, defined as the instant purchase of goods that were not originally planned for.
According to them, Nigeria’s sophisticated growing middle-class and the young population are more attracted to products that are better designed and smartly packaged, which informs their preference for foreign products over locally manufactured ones.
Another upside of better packaging is that it cuts down wastes arising from disposable packaging products, thereby sustaining the environment, experts say.
Analysts further say that modern plastic or flexible packaging can preserve foods longer, thus eliminating waste for a population that has a large chunk of hungry mouths.
“One-thirds of foods produced are discarded because they are not edible, as they do not have proper packaging. It is unfair to throw food into the trash because they are not good enough. This is why we advocate that flexible (plastic) packaging is best as it is cost-effective and sustainable,” said Javier Constante, commercial vice president, Dow Packaging and Specialty Plastics, Europe, Middle East and Africa.
Nigeria has a viable demography, comprising a growing middle-class and creative and vibrant youths which support the growth of packaging and FMCGs. Urbanisation has continued to spike, as the majority of the population in the cities prefer packaged foods to traditional ones owing to increased work pressure, traffic gridlocks and social demands.
One key segment of the packaging industry that has seen growth in recent times is food packaging, which has spiked on back of emergence of retail shops such as Shoprite, Spar and online shops like Konga, Jumia, among others.
Naomi Peterson, managing director, Nampet Ventures Nigeria Limited, producer of disposable plastic materials based in Port Harcourt, Rivers State, said the rising demand for plastic containers is being driven by the need to package food in very attractive containers.
Euromonitor International says in its December 2015 report that most of the leading companies in the food packaging segment are local players, such as Promasidor Nigeria Ltd, Dufil Prima Foods Plc, and Yale Foods Nigeria Ltd, while long-standing Nigerian representatives of multinationals, such as Cadbury Nigeria Plc and Nestlé Nigeria Plc, also have a strong presence.
“Foreign-owned brands dominate, however, because it is common for large international companies to form alliances with Nigerian companies to repackage and/or market their products in Nigeria. This lowers the risk of market entry. It also enables the international company to benefit from the existing marketing and distribution capabilities of the Nigerian company,” Euromonitor says.
ODINAKA ANUDU
