Nigeria’s fruit juice industry: Prospects, competition, challenges

Nigeria’s demography comprises mainly young people who drink a lot of beverages. With over 50 percent of the population below the age of 30, fruit juice makers have an opportunity to keep up with margins’ rise, analysts say.

Apart from demography, work pressure in cities and hot weather are also key drivers of the industry.

Africa’s most populous country has a huge number of fruit juice makers such as Chi Limited, Dansa, C-Way, Danico, Suntory, Frutta Juice, UAC Foods, Coca-Cola and Scoa.

Others are Fumman Agricultural Industries, Boulos Foods & Beverages, Rite Foods, Jamil, Abel Sell, Acreage Integrated Food, and Amiable Farm Produce, among many others.

The Raw Materials and Research Development Council (RMRDC) estimates Nigeria’s annual demand for fruit juice at 550 million litres, while supply by local firms is just 135 million litres, representing 24.5 percent.

The country produces 930,000 tonnes of citrus fruits annually from three million hectares of land, according to RMRDC.

Fruit juice comes in different packs and sizes. It can be made from orange, mango, guava and other fruit types.

Firms in the industry are expanding rapidly, introducing new products to consolidate competitive edge or stave off competition. Coca-Cola announced 40 percent stake in Chi Limited, one of the key leaders in the industry, in 2016. Coca-Cola, in December 2017, launched the pineapple, mango and apple variants of Five Alive.

Suntory took over GlaxoSmithKline (GSK)’s Lucozade and Ribena in 2016.

The drinks maker is targeting a double of its N20 billion revenue over the next five years, according to Bloomberg.

In 2016, Denna Rossi Limited introduced five brands served as both red and white cocktail drinks. More so, Rite Foods has made N30 billion investment in Ijebu in Ogun State, raising daily production of its soft drinks to 120,000 packs from 30,000 in 2017, the company said.

“We started with one production line in 2016. Now, we have four lines, and by November 2018, we’ll add two more lines,” Seleem Adegunwa, managing director, Rite Foods, told BusinessDay.

More investments are going on in the industry as each firm devises measures to deal with an increasingly health-conscious consumer base.

Nigerian consumers are seeking products with less sugar and chemicals, prompting some firms to focus on natural drinks. Some manufacturers say that their products have 100 percent juice content, though this is generating controversies in some quarters.

One sceptical consumer wondered how this would be possible when local fruit farmers produce seasonally, rather than all-year round.

Another sceptical manufacturer told BusinessDay that 100 percent fruit juice is costly, arguing that Nigeria does not even produce enough fruits to meet local demand. The manufacturer said this is doubtful, given that some firms even import fruits from West African neighbours when they are locally insufficient.

Nigeria’s government once mandated firms to ensure they have 40 percent of natural fruit content. Real Sector Watch cannot confirm how much this directive is being adhered to.

Consumers are becoming increasingly conscious, seeking healthier drinks that will nourish their bodies. With this shift in tastes, firms are responding rapidly, emphasising more on health benefits rather than taste.

In 2014, Kano-based Myer Industries Limited introduced natural fruits with eight variants.

“The health-conscious segment of the Nigerian population is growing rapidly and more Nigerians are in search of fruit juice that will improve their well-being. They are now very conscious of what they eat and drink. Many now opt for less sugar, healthy drinks, which Myer range of fruit juice is made essentially to offer,”Aisha Funsho, sole distributor in Lagos State, said then.

In 2015, Dansa, a member of Dangote Group, launched Kally Drink, a blend of natural fruits.

Euromonitor International, in March 2018 report on Nigerian fruit juice industry, says that reconstituted 100 percent juice had the worst performance in juice in 2017, with a rapid decline in total volume terms.

The report says that products in this category are generally more expensive than in other juice categories and so suffered, owing to the low consumer purchasing power in 2016 and 2017 as a result of economic stagnation.

Chi Limited was the leader in 2017, with the best value share gain in off-trade terms, a recovery from a similar share loss in 2016 when high unit prices led to consumers moving to cheaper brands, according to Euromonitor, an international research firm.

“Coca-Cola Nigeria held second place in juice in 2017. It used its strong distribution network within carbonates to position itself well in juice, with its 5 Alive brand being quite popular,” Euromonitor explains.

Despite positives, the industry is still hurt by farmers’ inability to farm all-year round, making fruit availability throughout the year difficult, analysts observe. There is still low research and development (R&D) to improve this phenomenon.

Production of concentrate is still a major problem in the industry. Key manufacturers want the government to strengthen the National Horticultural Research Institute (NIHORT) and other relevant research institutes to enable them provide appropriate technology for fruit preservation in order to encourage local production of concentrate.

In a statement obtained from the Manufacturers Association of Nigeria (MAN) last year, key players in the sector called for the continuation of import prohibition on fruit juice in retail packs to safeguard investments and jobs.

 

ODINAKA ANUDU