Indomie, Golden Penny noodles lock horns on prices

The last couple of weeks have witnessed a series of marketing gimmicks from two leading noodles manufacturers in the country –Flour Mills Nigeria which produces Golden Penny Noodles and Dufil Prima Foods which produces top-of-mind Indomie Noodles.

BusinessDay market investigation revealed that there is price war between the two companies ostensibly to lure more customers and deepen brand loyalty.

According to the investigation, about 4 weeks ago, Golden Penny Noodles crashed the price of its 70g size noodles by about 20 percent from N1,630 to N1,300  in retail market price, a move considered by some marketing and brands analysts as a market disruption strategy to woo consumers and perhaps displace Indomie regarded as the market leader.

Dufil, it is said responded immediately by crashing the price of its 70g size of Indomie from N1,950 to N1,700. It also increased the quantity of Minimee, another brand of noodles from its stable from 40 to 48 satchet while the prices of regular Indomie sizes of 120g, 200g, and 305g, remained the same at N3100 each at retail price..

A source said that as consumers’ purchasing power drops by the day occasioned by the current economic recession, one best way for brands to leverage the Nigerian consumer goods market is by lowering the price of commodities in the market.

Tope Asiwaju, the corporate Affairs of Dufil Prima Foods said the strategy by the  brand to lower prices was to make the products more affordable especially this time when the consumers  are experiencing depreciating purchasing power.

“In this recession, many homes cannot afford certain commodities and don’t forget that some of these products have shelf live”.  He said it is therefore imperative to lower the prices to create more purchases.

“Lowering the prices of commodities in the market especially at a time when consumer purchasing power is low could also create fierce competition among competitor brands for the retailers’ limited shelf space like is being noticed in the noodles segment of the retail market in Nigeria”, another source said.

Consumers’ reaction to the market variation since it started was captured by an interaction with two wholesalers in a visit to the Trade-fair complex, and some retailers within Lagos.

Ikechukwu Onyeukwu, trader at the trade-fair complex welcomed the reduction in the prices of the noodles

Another trader at the trade-fair market, Iyke Nwosu said consumers’ of Indomie increased since the drop in price in the last weeks.  Iyke hinted that Golden Penny noodles is planning to slightly increase the price of the 70g size noodles within the week. However, it is expected that the new price regime will take effect when the distributors take in new stocks.

Iyke regretted that cost of production has not really allowed manufacturers to lower prices as much as they wanted.

At Mile 2 shopping complex, traders attributed the reduction in prices by the brands as a response to entrance of Supreme, another noodles in to the market which sales at low price.

A trader who simply gave her name as Iya Dapo, Al Barika store said ‘’ The prices of noodles slightly reduced after the festive period, as it is now it is not about competition but a normal routine in the market”.

Tope another respondent in the market and a sales representative of Classical Inspirational Ventures put the price reduction  at N200 interval.

However, Alhaja of Tito Stores does not see the price variation as a result of the competitive nature of the market, “The price reduction is not a competition, as Indomie is trying to appreciate their customers in these hard times,” she said. But, in a contrast Abdul Mubarak, sales representative  for Ajala Stores said the reduction in product prices is a result of new competition in the market.

Usually a brand, which is promoted heavily, emerges as the market leader and therefore creates some market disruption that forces other competing brands to take actions by either lowering prices or increasing marketing and advertising budget.

When these disruptions are created in the market, it offers opportunity for brands and companies to promote diverse products as Dufil Nigeria Limited, owners of the Indomie noodles brand did with the introduction of Minimee in to the market to compete with other brands while its Indomie Noodle brand is placed in a class of its own.

Seyi John Salau and Ade Ismail