Bread, biscuits markets expand to N243bn

The market size of bread and biscuits, Nigeria’s staple foods, has grown to N243 billion, according to a KPMG report.
The size of the Nigerian biscuit segment is put at N121 billion, having grown at a compound annual growth rate (CAGR) of 16 percent in the past five years. Annual production is estimated at 152,490 tonnes, with five major players controlling almost 90 percent of the market share and small players making up the balance.
The size of the Nigerian bread segment is also estimated at N122.1 billion, representing 80 percent of the baked goods sector. The bread segment has grown at a CAGR of 14 percent in the past five years as annual production is estimated at 554,270 tonnes, with a CAGR of 3 percent over the corresponding five-year period, KPMG says.
The Nigerian bread and other baked goods segment is also highly fragmented with72 percent of the market controlled by artisanal and other relatively small to medium regional players.
The biscuit industry is dominated by Yale Foods (37 percent), OK Foods (20 percent), A&P Foods (14 percent), Deli Foods (9 percent), Nigeri Biscuit (5 percent)m Beloxxi (4 percent) and others (9 percent).
On the other hand, the break market is dominated by artisanal players (36 perent).
Also, competition forced down flour price from N10, 000 to N9, 500 in October.
In an October survey undertaken by Financial Derivatives, Bismark Rewane, CEO of the financial advisory outfit, said a price war between some millers forced down price of flour in the Nigerian market, amid 6.63 percent decline in the global price of wheat to $418.5 per bushel.
“Flour millers are facing consumer resistance against price increases,” Rewane said in Financial Derivatives’ October Highlights.
In terms of capacity, the flour milling capacity is dominated by Flour Mills of Nigeria (32 percent), Olam (24 percent), Dangote (19 percent), Charghoury Group (11 percent), Honeywell 10 percent) and others (4 percent).
Flour millers (mainly wheat) were hard hit in 2016 due to foreign exchange crunch which made importation of wheat nearly impossible. Most of Nigeria’s wheat is imported as millers struggle to find High Quality Cassava Flour (HQCF) as substitute.
Nigeria’s year-on-year wheat importation rose by 54 percent to N64.7 billion in first quarter 2017 from N42.1billion in q1 2016, according to data from the National Bureau of Statistics (NBS).
Olalekan Salisu, secretary, Flour Millers Association of Nigeria told BusinessDay that flour millers are not getting much cassava composite flour now because of the huge shortage of cassava tubers, which is why importation and prices remain high.
“There is heavy demand of cassava tubers now from people who process it into pellets and other by- products for export, leaving little for processors and millers,” Salisu said.

The Food and Agricultural Organisation (FAO) said in its recent biannual report that Nigeria’s 2017 wheat imports was estimated to increase by 100,000 tons to 4.6 million tons in spite of the restrictive access to foreign exchange and government renewed commitment to halve the country’s imports by 2018.

The FAO report said Nigeria is the third largest wheat importer in the world and that the import demand is expected to stay strong in 2017 as domestic production remains small.

Since 2009, prices of 50kg bag of flour has risen from around N4,940 and N5,100 (depending on the brand) to almost N10,000 today.
“Nigeria is one of the highest consumers of wheat in Africa, lagging behind only Ethiopia in Sub-Saharan Africa. Nigeria’s wheat consumption per capita of 0.023 MT/person,” the KPMG report says.

ODINAKA ANUDU