Dynamics in Nigerian fruit juice industry

The recent Gross Domestic Product (GDP) series released by the National Bureau of Statistics (NBS) shows that the food and beverage industry now accounts for half of the $46 billion (9%) contribution of the Nigerian manufacturing sector.

Capacity utilisation in this sector rose to 61.5 percent in the second half of 2013 (H2 2013) as against 53.5 percent in the first half of the year (H1 2013), and 52 percent in the second half of 2012 (H2 2012). While total investments of N32.52 billion were made in H1 2013, N49.95 billion worth of investments were made in H2 2013, says the Manufacturers Association of Nigeria (MAN), in its 2013 Economic Review.

A key sub-sector of the food and beverage sector is the fruit juice industry. Rising urbanisation, demographics, middle-class, disposable income, temperature as well as shifting tastes and high job demands have contributed to the robust market performance of locally-made fruit juice, according to experts. One significant progress made in the food and beverage industry in 2013 was the increase in raw materials sourcing to 79.34 percent in H2 2013, from 68.99 percent in H1 2013 and 70.74 percent in H2 2012.

“Most of them are finding ways of adapting to the use of local raw materials where such are available,” says MAN.

Real Sector Watch’s findings show that fruit juice makers such as Dansa Foods, Chi Limited, Nigeria Bottling Company, Fumman Agricultural Products Industries Limited, and Vital Products Limited, among others, are locally sourcing more of raw materials such as oranges, lime, lemon, grape, paw paw, guava, pineapple and mangoes.

Teragro Commodities Limited, the agribusiness subsidiary of Transnational Corporation of Nigeria plc (Transcorp) and the operator of the first-of-its-kind fruit juice concentrate plant in Nigeria, is also setting the pace in both raw materials sourcing, use and investments.

The Federal Government’s quest to encourage local fruit juice makers and increase foreign exchange earning hit retail packs importers a couple of years ago, with its placement on the Import Prohibition List of the Nigeria Customs Service (NCS), with the number H.S. Codes 2009.110012 – 2009.110013 – 2009.9000.99, Real Sector Watch checks have shown.

National demand for fruit juice is estimated at 550 million litres, while current supply is less than 25 percent of the demand, according to Nnamdi Anakwe of Foraminifera market research.

In a 2012 article entitled ‘Challenges, Prospects of the Nigerian Fruit Juice Industry,’ the Raw Materials Research and Development Council (RMRDC) said consumption of fruit juice in the country hit over 468.5 million litres as of December 2011, a figure based on a yearly consumption increase of 10 percent since 2002.

“Prior to the ban, approximately 80 percent (about 170m litres per year, valued at $255m) of Nigeria’s demand for fruit juice was filled by imports,” said RMRDC.

But one key problem in the industry is post-harvest wastage of fruit juice’s raw materials, which stood at 50 percent by 2011. Peter Hartmann, former director-general, International Institute of Tropical Agriculture (IITA), had even said in 2010 that post-harvest losses of crops in the country were more than one-third, and for fruits they were about 50 percent in many African countries.

However, the situation has significantly changed as post-harvest wastage has now reduced to 25 percent owing to increased commercial utilisation, BusinessDay findings show.

“But the government still needs to do more because the spoilage of the fruits usually starts from the field and more gets spoilt during transportation,” said Olutola Oyedele, a researcher at the National Horticultural Research Institute (NIHORT) and fellow of the African Women in Agricultural Research and Development (AWARD).

Apart from post-harvest wastage, imports are competing strongly with local products. But local manufacturers are also giving them a run for their money.

However, some industry watchers see opportunities for intending investors as some of the available fruit juice products are priced out of the reach of a number of consumers. They add that investments in tropical fruit production will have a great multiplier effects on profits of intending investors and the Nigerian economy. In 2013, players in the industry held a meeting with the RMRDC on the possibility of contracting all species of juices locally, while calling on continuous ban of the product in retail packs.

Popular brands of fruit juices in Nigerian markets include Frutta, Edge, Five Alive, Chivita, Fumman, Dansa, Fan juice, Bobo, Chi Exotic and Cway, among others.

ODINAKA ANUDU