Chocolate bars consumption to drive cocoa sales
Nigeria currently produces 350,000 metric tons of cocoa annually. It ranks third in the world after Cote D’Ivoire and Ghana. But unlike Nigeria, and in spite of massive influx of foreign chocolates, Ghana has made landmark achievement in local production of chocolate bars which compete very favourably with foreign chocolates and provide jobs for Ghanaians who work in local firms producing, or who own businesses wholesaling or retailing locally produced Ghanaian chocolate bars.
Fortunately for these countries as well as Nigeria, industry watchers have predicted that increasing domestic and worldwide consumption of chocolate bars and other cocoa products would be among the drivers of cocoa sales domestically and would also contribute some quota to international demand of cocoa.
According to Bridgat, an international market research outfit, the rising demand for chocolate bars in Nigeria shot up the product’s official import by 98.9 percent between 2008 and 2013. This is apart from the portfolio imports of many Nigerians who buy chocolates when they travel and bring them in for friends and family.
Therefore, Nigeria would be benefitting from an increasing global demand of cocoa if it sustains production of quality cocoa.
Akinwunmi Adesina, minister of agriculture and rural development, said last year that foreign exchange earnings from cocoa exports had grown from $900 million in 2012 to $1.2 billion in 2013, and it was expected to reach $1.5 billion in 2014.
He also said that “the cocoa revolution in Nigeria is receiving global attention, as Hershey, one of the largest chocolate companies in the world, has invested $20 million to procure cocoa from over 20,000 certified cocoa farmers in Nigeria. Nigeria has also launched into local manufacturing of Nigerian chocolates through a strategic partnership with a US-based company.”
According to Euromonitor, another international market research outfit, the increased demand for chocolate bars in Nigeria is due to growing number of expatriate population as a result of high levels of Foreign Direct Investment (FDI) in Nigeria within the period and use of expatriates in the construction industry. Euromonitor also notes that growing disposable income and westernisation of a segment of Nigeria’s population (middle-class) are also key factors driving strong growth of chocolate confectionery in Nigeria.
In addition, market watchers note that chocolate confectionery has also benefitted from an increase in modern retailers such as bigger supermarkets/hypermarkets and smaller independent small grocers. In response to rising demand for chocolate bars, some indigenous Nigerian cocoa processing companies, which currently produce cocoa powder for beverage purposes already have plans on ground to capture part of this growing market.
In 2013, Multi Trex, an indigenous cocoa processing firm, along the Lagos-Ibadan Expressway, commissioned its chocolate bars production plant with a view to going into manufacturing of chocolate bars very soon.
Odunayo Adeyemi, an industry watcher with several years of work in the cocoa industry, affirms the fact that there is a considerable market for chocolate bars in the country that is worthy of domestic investment. Apart from official import figures, he also points out that Nigerians usually purchase large quantities of chocolate bars to give out to people at home when they travel abroad.
He adds: “Multi Trex already produces cocoa products that are of international standards and its chocolate bars would also be of such international standards, which will compete favourably with imported chocolates.”
According to Euromonitor, chocolate demand in the country is forecast to record an annual growth rate of 9 percent between now and 2018 as chocolate demand continues to grow in line with incomes, expatriates presence, and the growth of modern retail channels.
It however hints that this growth rate in chocolate bars market would be boosted or weakened depending on electricity supply which will enable more retailers to stock chocolate bars if available but unable to stock if electricity is unavailable.
Currently, Cadbury and Nestle’s imported chocolate bars dominate the Nigerian market and are expected to continue leading in the next five years, except chocolate bars produced within the country make strong entry into the market with aggressive marketing and massive support from the government, according to industry watchers.
The analysts also note that the opportunity is now opened to indigenous producers of chocolates and the prospects are bright because the raw materials – the cocoa pods are abundantly available. Another factor is the devaluation of the naira that is making imported finished goods so expensive compared with locally produced ones. Industry watchers believe this may help investors consider local production of chocolates.
OLUYINKA ALAWODE