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Nigeria Food and Drink Report Q3 2007
Business Monitor International, Nov 2007, Pages: 37
The Nigeria Food Drink Report provides independent forecasts and competitive intelligence on Nigerias food and drink industry.
Issues of corruption and lack of adequate infrastructure continue to plague Nigeria’s food and drink industry, as discussed in the recently-published Nigeria Food & Drink Report for Q307. In July it was reported that Diageo-owned Guinness Brewers, which has been operating in Nigeria since 1962, had fallen victim to an adulteration scam. According to reports in the local press, the authorities have located an entire fake brewery on the outskirts of the capital Abuja, where legitimate Guinness bottles, stolen by the staff of the real brewery, were filled with the fake product and sold as the genuine drink. While two locals have been arrested, the National Agency for Food Drug Administration and Control (NAFDAC) is placing the blame for the incident squarely on Guinness for what it calls careless transactions that led to the frequent adulteration of its products. NAFDAC accused the company of not keeping careful enough control of its bottles and labels. In its defence, Diageo has issued a statement pointing out that the adulteration of products is an industry-wide issue in Nigeria, and that Guinness takes the issue very seriously.
Corruption is a major concern for anyone doing business in Nigeria, with the business environment perhaps the area in most need of reform. However, a lack of adequate infrastructure is also a major concern and a hindrance for food and drink companies operating in the country. This can also be seen in the country’s emerging dairy industry. According to local-industry estimates, in 2006 Nigeria produced 1.3bn litres of total domestic fluid-milk, although only around 600,000 litres of this entered formal marketing channels, through either commercial dairy farms, or co-operatives of migrant herdsmen. The remainder was either produced for consumption within families or traded informally within producing communities. Local production is still largely traditional, with dairy production dominated by traditional pastoral groups, which makes it difficult to introduce modern forms of technology. In 2006 Nigeria imported dairy products worth US$275mn, reflecting the fact that the domestic industry cannot meet demands, due to high production and processing costs and the non-competitiveness of the industry, as well as a lack of adequate technology and local infrastructure. Most dairy is imported in the form of milkpowder, which is reconstituted into liquid milk and other products, such as yoghurt and ice cream.
Nigeria currently has a population of around 135mn, which is growing at around 3% annually, making it the largest market in Africa. Despite the high levels of persistent poverty, a large middle class is emerging and driving the demand for a broader range of food and drink products. The author is forecasting considerable growth in food consumption in both overall dollar terms and in per-capita terms to 2011. Total food consumption will reach US$35.41mn in 2011, while per-capita consumption will reach US$229.7 - a significant improvement on 2006 levels, representing an 18.9% increase. While the market represents undeniable potential, particularly in the long term, it is clear that issues of corruption and inadequate infrastructure are still major concerns and will remain so for some time.
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