The carbonated soft drinks (CSD) segment in the country has continued to grow, despite the recent economic contraction which reduced purchasing powers of consumers.
This segment commands a sizable share in the food and beverage sector of the economy, despite the huge popularity of fruit juice, functional beverage, energy drinks, alcohol and bottled or sachet water in the market.
A research into the soft drinks market shows that there are over 18 carbonated drinks fiercely competing for market share in the country.
In their bids to increase market penetration, manufacturers of CSD products have adopted different strategies to expand the reach of their products and gain new consumers. This has further intensified the battle amongst manufacturers for bigger chunks of the soft drinks market.
The CSD market outlook
Carbonated soft drinks made an entrance into the Nigerian market in 1951 as products of the Nigerian Bottling Company Ltd, a subsidiary of the A.G Leventis Group with the franchise to bottle and sell products of Coca-Cola Company in Nigeria.
This leadership position remained unchallenged until 1960 when Seven-up Bottling Company commenced operations in Nigeria. Since then, the carbonated soft drinks market has been dominated by these two heavyweights and their brands have been big hits with consumers.
In early 2000, there was a market disruption as the La Casera Apple brand, an apple drink with real apple juice concentrate from the stables of LaCasera Company Plc, made entry into the Nigeria market. It is also noteworthy that it was the first to introduce PET plastic in its packaging.
Nigerian consumers across all ages and social classes fell in love with La Casera Apple, owing to its affordability and convenience of consumption as an on-the-go drink.
Before the introduction of PET plastic bottles, big players such as Coca-Cola and Pepsi had dominated the Nigerian carbonated soft drinks market with products packaged in glass bottles. This left consumers with the fear of bottle damage; needless to mention the hassles which came with carriage of glass bottles, and the unbearable stress of making monetary deposits when these products were purchased from retail stores. Some street urchins even used the bottles as deadly weapons in the wake of street brawls.
The introduction of PET packaged drinks by La Casera challenged the two previous giants (Coca-Cola and Pepsi) who also reacted with the launch their own PET bottle drinks into the market in 2004.
16 years down the line, many of consumers who spoke with Nairametrics believe that La Casera Apple gave Coca-Cola and Pepsi a good run for their money with the introduction of PET bottles.
The battle for market dominance
The Nigerian Bottling Company (NBC), makers of Coca-Cola engaged in a direct competition with La Casera by introducing a new drink, Fanta Apple, to compete with La Casera Apple, which had already gained the love and confidence of consumers.
The drawn battle line between Coca-Cola’s Fanta Apple and La Casera Apple was short-lived as Fanta Apple fizzled out into thin air.
However, the recent introduction of another direct competitor into the market seems to have taken La Casera unawares. The new product, Bigi Apple drink, has shown that it has all it takes to challenge the dominance of La Casera in the apple drink segment.
To gain market share, the company has adopted a combination of product quality, relentless consumer engagement, and aggressive advertising.
Bigi Apple, from the stables of Rite Foods Ltd, started production in 2007 as part of the Ess-Ay Holdings Group.
According to information on its website, the Ess-Ay Holdings Group started from a photography business and later grew to become one of the first fully-equipped colour laboratories in Nigeria by 1978. In the mid-2000s, the group diversified into the FMCG sector with the birth of Rite Foods Limited. However, a message sent to the company yielded no response.
Currently, the company produces many consumer products such as the Bigi sausage roll, table water, and carbonated drinks of different flavours. The company currently has 11 different consumer products on its list.
The size and price wars
Bigi Apple has garnered patronage from consumers, owing to the fact that the product comes in a bigger 600ml (60cl) PET plastic bottle and costs N100.
Owing to this, La Casera’s Pet bottle was changed from 50cl to 60cl, at the same cost of N100 which many describe as pocket-friendly.
What consumers say
Consumer preference is mostly influenced by taste appeal and brand loyalty. Many of consumers said that La Casera Apple has been able to sustain its unique taste over the years but wondered why the drink’s visibility has reduced.
Consumers also acknowledge that Bigi Apple seems to be dominating the Lagos market. They advised that La Casera must act fast before Bigi gains more visibility in other parts of the country.
Consumers believe that the major drivers of the market are the prices and sizes of the plastic bottles, which most times translate into increased content.
They commended La Casera for adjusting to the dynamics of the market by coming up with a bigger size pack with the same price.
A check on major retail stores in Lagos also revealed a large presence of Bigi Apple, while the La Casera Apple is hardly visible. A retail outlet owner identified as Mrs. Adeyemi revealed to Nairametrics that consumers prefer the Bigi Apple and it sells faster.
Bigi's market is only Lagos state and maybe south west, outside these places Bigi has no or very minute market share. So its only in Lagos Bigi is popularly know but generally Lacasara is king.
— tha Intern Boss (@chimmyark) June 12, 2018
I don't know how they did it but bigi has forced both lecasera and coca cola into a corner. I haven't been outside Lagos State but the aggressive move that bigi has employed, soon they will dominate the plastic bottle drink market
— Obie (@ObieOnonye) June 13, 2018
Right now Lacasera only has its past glory to stay afloat but what's really selling is Bigi Apple. Thats the most selling Bigi product. The demand is something else. If you ask shop owners, you will confirm.
— Timinipere Ababa (@timinipereAbaba) June 12, 2018
LOL its not even close. One has been around for so long, the other is only just starting. Unfair battle.
— SEUN (@Dan_Onas) June 13, 2018
According to a poll conducted by Nairemetrics, more consumers clearly voted for La Casera Apple as their preferred apple drink but also advised that the company needs to wake up from its slumber as the product is no longer as accessible as it used to be.
Recently, workers of the company threatened to shut down the company over some unresolved labour disagreements. This and many other internal issues may have impacted on its distribution capacity.
The dominance of La Casera in the apple drink segment is under threat with the emergence of Bigi Apple in the market. How this eventually plays out, only time will tell.
Additional information provided by Aluko Meka and Ayooluwa Hasstrup
Nigeria’s border reopening will not impact profitability in 2021 – Flour Mills GMD
Flour Mills Nigeria Plc has stated that the recent reopening of the nation’s land borders will not affect the profitability of the company.
Mr. Omoboyede Olusanya, the Group Managing Director of Flour Mills Nigeria Plc has disclosed that the recent reopening of the nation’s land borders will not adversely impact the performance and profitability of the company in 2021 and beyond.
He added that FMN will continue to leverage brand loyalty, product standardization and innovation, as well as improved cost efficiency to increase profitability in 2021.
This statement was made by the Olusanya during the company’s 9M’20/21 Investor Webinar which held virtually on January 26, 2020.
According to the statement made by Mr. Olusanya at the virtual meeting, the reopening of the nation’s land border will not affect the company’s sales and revenue, as Flour Mills Nigeria is focused on increasing operational efficiency with accelerated plans for cost optimizations across the group to ensure competitive product offerings and profitability in the new operating environment, occasioned by the border reopening.
He revealed that the company will continue to invest in local content development, production capacity and aggregation to strengthen product innovation and product standardization in a bid to foster brand loyalty.
In line with this, Flour Mills Nigeria has invested heavily to upscale its Regional Distribution Centers (RDCs), in order to gain direct access to consumer market segments across the country, and expand consumer reach with the road to market initiatives and product offerings across the group, especially in the B2C segment.
Olusanya revealed that the group has successfully opened new regional distribution centers (RDCs) in Kano, Magboro and Abuja targeting the new fast-growing B2C product categories (fats, sugar and garri).
He added that the FMN Group among other strategic investments made, has invested in trucks to support the RDCs, animal feeds and starch value chains; as well as sales force automation platforms to ensure high-quality processes and services.
He concluded that the activities of the company will be complemented by the efforts of the nation’s border security, as these agents would ensure that the borders do not become porous, and would help to curtail markets from being proliferated by imported items.
What you should know
- Recall that Nairametrics reported that Flour Mills Nigeria Plc declared a profit of N5.65 billion in the third quarter ended, 31st December 2020.
- The report revealed that the profit which Flour Mills made in the third quarter of its accounting year 2020/2021 rose by a whopping 150.36% when compared to the profit it made in the corresponding period of 2019.
- It is important to note that the impressive performance of the company was driven by the agro-allied segment. The Agro-Allied segment benefited immensely from the August 2019 border closure, as the profit from this segment improved by 15,268%.
South African President appeals to wealthy countries not to hoard COVID-19 vaccines
South African President, Cyril Ramaphosa has called on the world’s wealthiest countries to stop “hoarding” vaccines.
The South African President, Cyril Ramaphosa has urged the world’s wealthiest countries to stop “hoarding” vaccines and called for an end to “vaccine nationalism.”
He made this call at the World Economic Forum’s virtual Davos Agenda event, where he clearly cautioned that some countries had ordered more supplies of vaccines than they needed, and that this was counterproductive to the global recovery effort.
According to him,
- “Ending the pandemic worldwide will require greater collaboration on the rollout of vaccines, ensuring that no country is left behind in this effort”
- “The rich countries of the world went out and acquired large doses of vaccines from the developers and manufacturers of these vaccines, and some countries have even gone beyond and acquired up to four times what their populations need”
- “That was aimed at hoarding these vaccines and now this is being done to the exclusion of other countries in the world that most need this”
What they are saying
According to Africa CDC Director, John Nkengasong, the African continent is quite facing a “very aggressive second wave” of the pandemic, with mortality increasing on average 18% across the 55 African member states last week.
“We as a continent must recognize that vaccines will not be here when we want them, but as such we need to really focus on the public health measures that we know work”
He however praised the progress of the African Vaccine Acquisition Task (AVAT) Team, which he said was created when AU nations realized “how the world’s richest countries are behaving.”
What you should know
- South Africa is the country, worst hit by Covid-19 on the continent.
- As at date, the country had recorded more than 1.4 million cases with 41,117 deaths.
- The African Vaccine Acquisition Task (AVAT) Team has secured a provisional 270 million doses for AU member states directly, in addition to the 600 million expected from the World Health Organization’s COVAX initiative.
IMF optimistic about global economy but warns new Covid variants could affect recovery
IMF is quite optimistic about the fortune of the global economy but expressed fear that the new Covid variant could derail economic recovery.
The International Monetary Fund (IMF) has expressed optimism about the global economy but warns that the new COVID 19 variant could affect the global economic growth, according to its latest World Economic Outlook.
According to the report, “the institution now expects the global economy to grow 5.5% this year — a 0.3 percentage point increase from October’s forecasts. It sees global GDP (gross domestic product) expanding by 4.2% in 2022”.
According to its Chief Economist, Gita Gopinath:
- “Much now depends on the outcome of this race between a mutating virus and vaccines to end the pandemic, and on the ability of policies to provide effective support until that happens.
- “There remains tremendous uncertainty and prospects vary greatly across countries.
- “China returned to its pre-pandemic projected level in the fourth quarter of 2020, ahead of all large economies. The United States is projected to surpass its pre-Covid levels this year, well ahead of the euro area.
- “Policy actions should ensure effective support until the recovery is firmly underway, with an emphasis on advancing key imperatives of raising potential output, ensuring participatory growth that benefits all, and accelerating the transition to lower carbon dependence.”
What you should know
- There has been a surge in the number of reported cases of the new variant Covid-19 infections and deaths over the past few months.
- The new variant has been described as being more infectious and potentially deadlier than the original strain.
- The IMF had cut its GDP forecasts for the euro zone this year by 1%.
- It is being projected that the 19-member region, which has been severely hit by the pandemic, would grow by 4.2% this year.
- Germany, France, Italy and Spain — the four largest economies in the euro zone — also saw their growth expectations cut for 2021.
- Economic activity in the region slowed in the final quarter of 2020 and this is expected to continue into the first part of 2021. The IMF does not expect the euro area economy to return to end-of-2019 levels before the end of 2022.
- IMF revised its GDP forecast upward by 2% points on the back of a strong momentum in the second part of 2020 and additional fiscal support, with GDP expected to grow to 5.1% this year.