Food, beverages drive packaging industry’s 12% market share

Nigeria’s packaging industry’s 12 percent market share in Africa and Middle-East has been driven by significant growth in food, beverages and agriculture, Real Sector Watch has found.

PCI Film Consulting recent survey had put Nigeria’s packaging industry’s share of the $4 billion Middle-East and African markets in the last five years at 12 percent.

Findings have shown that growth spurt in the food and beverages industry has contributed significantly to the performance of the packaging industry.

The country’s food and beverages industry has seen appreciable growth as investments by the second half of 2013 rose 53.60 percent to N49.95 billion, while capacity utilisation increased to 61.5 percent, from 53.5 percent reported in the first half of that year (H1 2013).

Similarly, output spiked to N483.53 billion, from N353.20 billion reported in H1 2013, data from the Manufacturers Association of Nigeria (MAN) have shown.

Many food and beverage firms such as Nestle, Nigeria Bottling Company, Cadbury, Flour Mills of Nigeria, Dangote Sugar, Promasidor, PZ Cussons, among others, package their products in any or some of plastic, aluminium, corrugated cartons, polybags, food packs, plastics, cellophane, glass (bottles), metal (aluminium cans) and brick cartons. Some of these firms are also key exporters of food and beverages to other markets.

“The demand for plastic containers is being driven by the need to package food in very attractive containers. The demand for plastic containers as food packages has gone up by about 40 percent in the last five years,” according to Naomi Peterson, managing director, Nampet Ventures Nigeria Limited, producer of disposable plastic materials in Port Harcourt, Rivers State.

Foraminifera, a marketing research company, says the annual production of polythene material, which is the most widely used plastic material in Nigeria, is currently about 80 million metric tons. It says in the last five years, annual production of plastics increased by over 30 million metric tons.

Similarly, there is high demand for well-packaged packaging agricultural products.

National food production in the country increased by 21 million metric tons in 2014, while private sector investments in the sector hover around N1 trillion between 2012 and 2014, according to Akinwunmi Adesina, minister of agriculture and rural development.

Currently, ‘Mamador’ palm oil is packaged in neat cellophane by PZ Wilmar Limited, a subsidiary of PZ Cussons Nigeria plc. Similarly, raw food items such as the local ‘Ofada’ rice is also processed and packaged by Blossom Day Global Enterprises, among other firms. Sugar is equally packed in different bag sizes by Golden Sugar Company and Dangote Sugar Refinery, among others. Some locally packaged agric products have found markets across Africa.

Jimi Johnson, a licensed stockbroker and SME consultant, says the packaging of snacks such as cashew nuts, groundnuts and beverages (such as malt, juice and soft drinks) with plastic containers as well as the increasing popularity of bottled water make food-packaging plastics rank very high in output volume than other range of plastics in the industry.

But he adds that the demand for plastic containers is also being driven by products such as pharmaceuticals, cosmetics and washing liquids, among others.

Nigeria’s demography, convenience and growth of retail stores such as Spa and Shoprite have also been key to the growth of the packaging industry. Growth of online channels like Jumia and Konga has also been a strong contributing factor.

“Work pressure and demand for convenient lifestyle in the cities combine to drive demand for packaged goods. These have brought about a gradual shift from traditional to packaged foods, thus driving the growth of modern, super and hyper-market outlets,” Patrick Olubunmi Marinho, CEO, Avante Consulting Solutions, said in an earlier interview with BusinessDay.

ODINAKA ANUDU