72% of Nigeria’s $621m bread industry dominated by small-scale bakers

Nigeria’s bread sub-sector is growing at a faster pace, with 72 percent of the $621 million industry dominated by small- and medium-scale bakers, according to a 2016 KPMG report.

Bread is a staple food on the tables of many Nigerians. It is usually made from wheat-flour dough that is cultured with yeast, allowed to rise, and finally baked in an oven, according to Wikipedia.

“The Nigerian bread and other baked goods segment are highly fragmented. Seventy-two of the market, as at 2015, was controlled by artisanal and other relatively small to medium regional players,” says the KPMG report.

Nigeria has SME bakers such as Magnified Bread, Excellent Bread, Salama Bread, Afoma Bakery, Divine Bread, Chukwujekwu Bread Cake, Pladin Bread, Ofoma Bread, and Debi Bread, among thousands of others.

UAC Foods, makers of Gala led the market in 2015, with nine percent share of the market.

Retail stores such as Shoprite, Grocery Bazaar, Konga and Jumia also produce bread meals considered as fresh by many Nigerians. Young Nigerians spend forty-five minutes to one hour waiting for freshly baked loaves of bread at Shoprite, not only because of freshness but also moderate prices (N300 to N320 for a medium-sized loaf).

Bread has different sizes in Nigeria and prices. Prices of different sizes of bread have risen by 25 percent (averagely) in the last six months on the back of increased prices of wheat flour, sugar and butter.

The report says that consumption dynamics in the bread industry has gradually changed, as packaged bread meals grew at a faster rate of 3.4 percent, relative to the 2.3 percent growth in unpackaged/ artisanal bread1 category, owing to the general perception of higher quality of the packaged products.

The report says, however, that growth in the artisanal segment remains fairly stable, and the share of the market remains significant at 36 percent, primarily due to price.

Despite the growth being recorded in the industry, there is yet no real organised distribution model for bread within the informal sector in Nigeria, which accounts for approximately 80 percent of volumes distributed.

“This is primarily done through a network of distributors and sub-distributors,including hawkers and street vendors. Formal distributionis done through supermarkets and neighbourhood retail stores,” the report notes.

Food Concepts Plc, owners of Butterfield Bakery with 3,000 loaves per day capacity, also operates an inclusive model. The model offers an alternative route-to market,designed to ensure products are baked in close proximity to its consumers, says the report, adding that this is achieved by offering distributors the opportunity to become franchisees, to own their small bakeries and sell directly to sub-distributors.

The model provides franchise funding, marketing support, training and premix (flour, packagingsupport, etc.) to ensure quality and higher yields, it adds.

ODINAKA ANUDU