Packaged foods show growth potentials on back of consumer acceptance

An emerging trend in the retail business shows growing sophistication of Nigerian consumers who are embracing packaged foods of various local delicacies such as stockfish, ogbono, egusi, dry pepper, dried and smoked fish, mushroom, etc. Presently, most consumers including emerging middle-class in the country patronise the modern grocery stores, which hitherto appear to be exclusively for the elite.

Hence, Nigeria has remained strong and steady in the growth of packaged food market with attributes to sheer size of population, which equates to enormous and growing demand for packaged food products.

Together with the increased demand for newer types of products is the fast growth of the modern retail channels, driven by Shoprite, Spar, etc. These channels tend to stock more Westernised types of food such as canned/preserved food and frozen/preserved food with their growth parallel with their demand.

Findings from Euromonitor International shows that, “even smaller retail channels such as independent small grocers which label themselves as supermarkets, though they are too small, are increasing in the number of outlets that store packaged food products, which are generally Western in origin.”Modern retail chains now store products such as chocolate confectionery that was traditionally difficult in the country due to unstable power supply.

Analysts note that increasingly, medium-income earners now patronise grocery stores, which until now, seemed to be the exclusive preserve of the higher income class.“The increasing sophistication of Nigerian consumers and improved product quality are growth drivers in this market. As a result, an average Nigerian spends more on packaged foods, especially on items previously regarded as luxuries,” they note.

Packaged food market in the country is highly fragmented with the presence of domestic and multinational companies. Multinationals generally dominate except in categories where domestic players are protected by legislation, such as biscuits. Notable players include Cadbury Nigeria plc, Nestlé Nigeria plc, UAC Foods, De-United Foods Industries, HJ Heinz Co., and Friesland Campina WAMCO Nigeria plc. It is also common for large international companies to form alliances with Nigerian companies to repackage and/or market their products in Nigeria, which lowers the risk of market entry.

Anne  Agbaje