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Nigeria Food and Drink Report Q3 2009
Business Monitor International, July 2009, Pages: 46
Business Monitor International's Nigeria Food and Drink Report provides industry professionals and strategists, corporate analysts, food and drink associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Nigeria's food and drink industry
Providing investors a hybrid of tremendous untapped potential and a notoriously challenging regulatory environment, Nigeria remains a market not suited to the feint of heart. The potential of the country’s food industry has attracted renowned multinationals of the calibre of Cadbury, Nestlé and Unilever as discussed in BMI’s recently published Nigeria Food & Drink Report for Q309.
Earlier this quarter, Cadbury’s Nigerian subsidiary reported a year-on-year (y-o-y) net loss of NGN2.8bn (US$19mn) for FY08 despite increasing its turnover by 22% y-o-y to NGN24.3bn. The company is recovering from an accounting scandal that resulted in it being fined by Nigeria’s Securities and Exchange Commission in 2008 after it was found to have overstated its financial position between 2002 and 2005. Yet its double digit turnover growth in FY08 and its position as one of the country’s leading confectionery firms by market share (estimated to be over 65%) should ensure it is in position to benefit from Nigeria’s upbeat food outlook once it returns to profit.
Unilever Nigeria’s FY08 results were less volatile. It reported net income of NGN2.6bn and increased its turnover by 10% y-o-y to NGN37.4bn. Its Nigerian food and drink business is led by its popular Knorr and Lipton brands.
Following on from a net income posting of NGN8.33bn in FY08, Nestlé Nigeria announced robust Q109 net income of NGN1.75bn and a 21% y-o-y increase in turnover, which further quashed doubts that its business and indeed that of the wider food and drink industry was likely to be weighed down heavily by the near-term economic slowdown – a view BMI has not carried as we believe the market to be highly unsaturated. Companies are growing volumes from an extremely low base relative to the formidable size of the market.
In a further development, Nestlé Nigeria announced that it was close to beginning construction of a modern manufacturing facility in Ogun State as it reiterates its commitment to investment in the country. Through to 2013, BMI has forecast Nigeria’s food consumption to increase by 16% to NGN5.8trn. Although growth over our five-year forecast period is fairly undynamic, considerable economic development must still take place before food consumption begins to grow at a more robust pace.
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