Cereal companies war for space on Nigerian breakfast tables

Growing up 30 year old Lola equated breakfast to either the Quaker White Oats brand or Nestlé’s Golden Morn brand; these went with St Louis’s cube sugar and Peak’s powered milk. Breakfast without any of these elements was incomplete for playful and boisterous Lola. Her parents, who grew up in the village remained great fans of akara and akamu for breakfast.

Today, Lola an entrepreneur and a mother of two children, three and five years old respectively has woken up to the fact that breakfast is bigger than the brands she had been used to as a child. She introduced her children to Nestlé’s Golden Morn but through interactions in school the children were lead discover Kellogg’s Coco Pops and fell in love with the product.

Nigerian breakfast tables have turned into a commercial battlefield with breakfast cereal making companies fighting to capture and hold high grounds and the sunny hill. According to Euromonitor, a market research firm, breakfast cereals in Nigeria is still growing, but it has been negatively impacted by the downturn in the economy as most products (or their ingredients) are imported. Local products such as Nestlé’s Golden Morn among other Ready to Eat (RTE) cereals are performing better.

However, the RTE cereals market in Africa’s largest economy is changing rapidly. Nestlé’s dominant position in that market space is been challenged by Kellogg’s entry to the advantage of consumers who tend to be price sensitive. In September 2015, the United States’ food group Kellogg, entered into $450m joint venture with Singapore’s Tolaram Group to develop breakfast foods and snacks for the West African market, with focus on Nigeria as it expands its footprint on the continent.

According to Eurominotor, a year after its entry into the Nigerian market, Kellogg Co has maintained its lead in breakfast cereals, clinching a value share of 23 percent with a broad portfolio that covers several categories and includes a number of global brands with high quality reputations. Kellogg’s brands are premium priced and are generally only consumed by middle to upper income earners. This exposed it to the current recession making it lose one percentage point from its value share, having already lost one percentage point from its share in 2015.

Nestle Nigeria ranked second with a value share of 16 percent, thanks to the popularity of its Golden Morn brand, while Nasco Group (Nigeria) Ltd rounds out the top three with an 11 percent value share, as it’s locally produced Nasco brand is price competitive.

Breakfast cereals are not traditional Nigerian food products, given Nigerians favour traditional breakfasts such as akara and akamu. The key drivers of this category are growth in formal employment, urbanisation and westernisation. In addition the huge advertising budgets of these companies meant to raise awareness of the need to take convenient but nutritious breakfasts that are quick to prepare is paying off.

McKinsey estimates that Nigerian households with incomes of more than $5,000 a year will increase from 20 per cent of the population to 27 per cent by 2020, putting them within the target customer base of formal retail chains.

This means that breakfast cereals will continue to perform well in the coming years, with a Compound Annual Growth Rate (CAGR) of 2 percent at constant 2016 prices. Retail volume and value sales will likely be bolstered by new launches, particularly of healthier products, as well as by improvements in distribution, along with price promotions and other marketing activities.

STEPHEN ONYEKWELU