The Nigerian consumer market remains an attractive space for investors. Hence, one is not surprised by the increase in activity in the food and ready-to-eat segment of the market space. In this market segment, biscuits, which are widely eaten among young children and even adults, have continued to remain relevant.
Nigeria is home to several local and international manufacturers of biscuits. Interestingly, the local manufacturers are holding their own in the struggle for market share, as they easily have command of over 50%.
Welcome to this week’s edition of product review, a weekly analysis where Nairametrics features products contending for leadership and prominence in Nigeria’s consumer market. This week, we take a look at the various Biscuits brands and how they are competing for profitability and visibility in the market space.
Some facts about the biscuit market
Going by a report from the Transparency Market research group, global revenue generated from the biscuit market is estimated to be valued at roughly $76 billion by the end of last year and to be valued at over $135 billion by the end of 2023.
In a 2016 KPMG report, the size of the Nigerian biscuit segment was estimated at N121 billion (US$617 million), having grown at a Compound Annual Growth Rate (CAGR) of 16% in the past five years. Annual production is estimated at 152,490 tons, with an estimated annual consumption put at 500,000 tons.
Unique Value proposition
Accessibility of raw materials: The major ingredient for biscuits is wheat flour, which is considered healthy and can be sourced locally. Other ingredients include palm oil or vegetable fat, and sugar.
However, local manufacturers also have to import other ingredients and additives for their production, and though, these are not considered major ingredients making this a largely locally sourced market for raw materials.
Nutritional value: Biscuits are wholesome pastries, which are quite rich in common nutrients. They can also be preserved for a long time.
Affordability: The price of a pack of biscuits in the country can go for as low as N20 – N100, which is relatively affordable for consumers. However, some imported brands go for as high as N1000 per pack.
Market categories: The digestive and glucose-based biscuits are categorised as soft dough biscuits, while the salty or sweet tasty biscuits, which are produced by naturally fermented methods, are categorised as cream cracker biscuits. The hard dough biscuits include the sweet cabin brands by Yale Foods and coastal biscuits.
Brands in the market space
The major local and international biscuit manufacturers in Nigeria include Beloxxi Industries Limited, Niger Biscuit Company Limited, Yale Foods Limited, Newbisco Limited, Major Biscuit Company, Global Beverages Nigeria Limited, Nasco Food Nigeria Limited, Ok Foods Limited, Julie’s Biscuit Nigeria, A&P Foods Limited and Deli Foods Limited.
In the KPMG report, Ibadan-based Sumal Foods Limited, makers of the Yale brand, led the pack with about 37% market share, trailed by Ok Foods with 20% (though it has since relaunched itself into the market space with the introduction of Pure Bliss biscuits), A&P Foods with 14%, Niger Biscuit Co Ltd with 5%, Deli Food and Beloxxi Industries, with 9% and 4% respectively.
Strategic partnerships, mergers, and acquisitions in the Nigerian market
Beloxxi, makers of the Cream Crackers brand, had in 2017 received an investment of about $80 million from a group of private equity investors led by rock star, Bob Geldof.
Also, United Biscuits, one of the world’s largest biscuit market and makers of the Mcvities brand, purchased a stake in A&P Foods in 2014, one of the leading biscuit manufacturers in Nigeria. A&P Foods produces biscuits from Ikeja, Lagos and is owned by the Assudamal Group. The company owns the Haansbro biscuits brand, and also produces chewing gums, boiled sweets, and toffees.
Olam also acquired Titanium Holding Company SA (owners of OK Foods) in 2012. While in 2010, the Tiger Brands, a South African company, acquired a majority stake in Deli Foods.
The Okin Brand seems to have disappeared from the market space
Some years ago, the Okin Biscuits brand was the go-to brand. Back then, the two variants, shortcake and the round shaped Okin Biscuits, were every child’s delight. The Kwara-based Okin Biscuit factory was founded by Chief Emmanuel Adesoye, he also founded the popular Adesoye College, Offa in Kwara State. However, the harsh business environment coupled with competition from imported biscuits, and bad management led to the eventual collapse of the company.
What consumers are saying
Findings by Nairametrics show that the proliferation of supermarkets has led to an increased visibility of various biscuits brands in the market. A retailer, Mrs. Ifunaya Ejims, while giving the reason for the relatively low prices of biscuits, noted that manufacturers have come to understand that biscuits have become convenient snacks, which people take to the office, eat ordinarily, take with tea and pack in children’s snack packs.
A consumer, Mr. Niyi Owojori, noted that the introduction of Pure Bliss into the market has revived his interest in biscuits, adding that he loves the taste of the brand.
“I had actually stopped eating biscuits for some time, but a friend introduced the new Pure Bliss to me and I really love the taste.”
Another middle-aged woman, who works on the Island, noted that he loves to eat the Pure Bliss Brand when stuck inside traffic hold-up.
According to her:
“Some of these hawkers now prefer to hawk Pure Bliss Biscuits inside traffic because it sells very fast.”
Confirming this assertion, a hawker around Bonny Camp, Ibrahim, noted that Pure Bliss sells even faster than sausage rolls these days.
Another mother of two noted that she loves the digestive brand and her children enjoy taking it to school.
“My children just want tasty biscuits and they are okay with it. The price is also affordable for me.”
In a Twitter poll conducted, the Pure Bliss brand got 50%, Digestive got 24%, Cream Crackers and Coaster got 14% and 12% respectively.
Which is these biscuit brands is your favorite? Retweet and comment with #nairametricspolls
— Nairametrics (@Nairametrics) November 27, 2018
Amidst rising sales and a booming market, Nigerian biscuit manufacturers are also grappling with higher prices of flour, wheat, and sugar – major ingredients for biscuits production. In spite of the current challenges, the outlook for the segment is positive, driven by product affordability, ease of purchase and Nigeria’s large and growing population.
The manufacturers should focus more on backward integration to enable it reduce its operating costs. While regulatory agencies such as NAFDAC and Consumer Protection Commission (CPC) must ensure that only safe brands find their way into the Nigerian market.
Switch by Sterling: The remittance game changer
Subscribers to Switch will enjoy unlimited and seamless access to transfer money from abroad like regular wire transfers.
Although Nigerians in diaspora have always been able to access banking services in Nigeria through digital platforms, the recent introduction of the Switch banking app by Sterling Bank is bound to be a game-changer in the mobile banking space.
This is because Switch, a multi-service banking app, leverages technology to address some inadequacies of cross-border transactions and online money transfer such as Dollar to Naira or other convertible currencies on the front burner.
Regardless of exchange rate volatility, subscribers to Switch will enjoy unlimited and seamless access to transfer money from abroad like regular wire transfers.
Coming on board when the Central Bank of Nigeria (CBN) unveiled a new policy that ensures unhindered remittances for Nigerians in diaspora, Switch has berthed as a product of corporate foresight and a veritable source of foreign exchange earnings for Nigerians.
…Mobile Apps have Come to Stay
The advent of Switch into the mobile banking space in Nigeria has raised the bar of competition in a territory where MoneyGram, Western Union, PayPal, WorldRemit and RiaMoney have held sway over the years.
The app’s user-friendly features have endeared it to Nigerians in diaspora and relegated the competition in every aspect of money transfer from abroad. Essentially, the app is uniquely designed for diverse financial products such as insurance, treasury bills, fixed income securities, payment requests, investments and asset financing, among others.
The money transfer app, which has gained frontline status in its short period of existence, stands out from the competition and serves as a hub for sending money to Nigeria from the United States, United Kingdom and Canada. The easy to use app provides an opportunity for issue resolution using e-mail and social media accounts.
… Coming on Board of Switch
In order to register on Switch, a client is expected to provide aname and contact information while the registration ends with funding of the account. This enables the client to deploy the savings account to transfer money into other Switch users for free and transfers to non-Sterling bank account with fees of N25 or less.
The Switch app can be downloaded from either the Google Play Store or App Store. Subscribers can effortlessly register on the web by a click on the web too. Proving attractive to Nigerians of 18 years and above, its simplicity is fast boosting subscribers’ confidence. Clients will pay zero fee for transfers in the first six months.
…Switch Hedges Subscribers against Fraud
The world of mobile apps is like a game of whack-a-mole. As one fraud is being tackled, fraudsters rear their heads elsewhere with new tactics. Criminals have always exploited the mobile space with fake mobile apps.
However, the ongoing uptick in registration for Sterling Switch is not unconnected with the mobile app’s fraud-protection strategy that runs on advanced machines, specially designed to thwart fraud at both the install and in-app levels. This effectively hedges subscribers of Switch against cyber attacks.
…Switch by Sterling, a win-win
Switch is indeed a game-changer. The much sought-after solution provides better value to customers, builds a stronger brand, unlocks power of better connection for customers and makes account opening easy.
Prospective customers need not download many apps in order to invest in different asset classes. Switch provides opportunities for subscribers to build wealth through investment in various asset classes. It boosts profitability for the custodian.
Subscribers can transfer above N50,000 to other Nigerian banks. In order to enhance its services along the value chain, the solution operates on extended partnership network with PIP iT in the UK, i-invest and Doubble.Ng, among other institutions.
As a top brand, Switch by Sterling identifies its target demography, encourages user engagement, ensures compliance with platform design guidelines, uses frictionless navigating features and is highly responsive.
Switch stands out as the cheapest means for Nigerians in diaspora to transfer money online without risks associated with cross-border transactions. The financial mobile app is fast becoming the benchmark for other mobile apps in the Nigerian banking space.
COVID -19 saving Nigerians millions in wedding and burial costs
As long as the pandemic persists, the ‘new normal’ is for ceremonies to remain subdued.
It was a sunny Saturday in May and like it had been for the better part of 8 weeks, the new normal was in force in Nosa’s household. The lockdown induced COVID-19 meant that all the hustle and bustle of giving attention to side hustles on weekends had all evaporated. Now he spent more time with his kids watching TV and playing video games. Whilst he has had to endure multiple weekends of lost revenue, staying indoors meant that his personal finance was still intact. But things would change dramatically this weekend.
Nosa got a call that he had just lost his aged mother to a brief illness. He had been battling with a terminal illness for years, but things seemed to be under control so her death came as a surprise. Even as he grappled with the thought of losing his mother, Nosa knew that he had to start making preparations for the expenses that are bound to come with burials in an African setting.
Thanks to the pandemic, and rules that came with it, Nosa ended up spending much less than he would have for his mother’s burial with most of the funds going towards mortuary expenses, transport and the direct cost of the actual burial itself.
READ ALSO: Post COVID-19: The Challenges Ahead
“This COVID-19 is bad but it has saved me millions of naira that I would have spent in this burial,” he remarked.
“I wanted to give my mom a befitting burial but these are hard times and I may have borrowed money just to fund this. But with COVID-19 and social distancing in place I did not have to do any of this,” Nosa informs our reporter.
Nosa’s gains translate to massive losses for a whole chain of service providers in the event management industry. Similar occurrences over the last few months have resulted in the loss of revenue for such businesses.
Events in Nigeria often cost anywhere between half a million naira to over N100 million depending on the financial muscle of those spending. Burials, weddings, naming ceremonies and birthday parties, make a burgeoning industry that spans several sectors of the economy.
From mortuaries to casket makers, event planners, event Halls rentals, professional mourners, caterers, confectionaries, party rentals, photographers, video editors, tailors, newspapers , etc, its an entire value chain of businesses that provide one service or the other for this industry.
Each of these events cost millions of naira to organize hosting as many people as the budget can support. According to a CNN article quoting a report from TNS Global, Nigerians spend as much as $9,460 for a wedding ceremony. The report also indicates the party industry could be worth as high as $17 million based on statistics in 2017.
The math can be easily deducted. Assuming 50,000 ceremonies every weekend at an average cost of N1 million that is a N50 billion per weekend or N2.7 trillion ($6.75 billion) per annum. GDP data from the National Bureau of Statistics indicates sectors that support the ceremonies market in Nigeria, telecoms, transportation, Arts and Entertainment is worth a combined N18.4 trillion.
Chuks, a Partner at a top consulting firm in Nigeria admits were it not for the pandemic his wedding could have cost him about N15 million personally and another N20 million spent by family, friends, colleagues and well-wishers. He is in his forties and his wedding had been much anticipated. He went ahead with his wedding last weekend with less than a dozen people in attendance and over 140 others logging on via Zoom. He claims while he ended up not spending millions on food, drinks, wedding halls and other logistic costs, he still achieved his goal of getting married.
Necessity they say is the mother of invention and has millions stay locked in their homes, they have resorted to apps such as Zoom, Instagram Live, Microsoft Teams to hold virtual events. These days Zoom themed parties now have their own rules and conventions. Friends from all parts of the world log in with each person taking turns to say nice things about the celebrants. Games are conducted to spice up the event and stories told by the celebrant. Music is also played by the Zoom host with participants dancing and having fun.
“It is like watching a live movie and also being part of it as the audience and participant” a wedding planner informed Nairametrics. Whilst one cannot underrate the connection physical socializing brings, virtual meetings are gradually becoming a lifestyle and the longer social distancing continues its cultural significance will only continue to increase.
Aderonke Adebamibola, CEO of Unik Ushering Agency, an Event management firm, confirmed to Nairametrics that business has really slowed down in the last few months. “Even though the NCDC has now given rules to guide weddings and other events, the budget now is way less than it used to be due to the cap on numbers of guests” she explained.
Now, most events are kept within the premises of family residences, depriving hall rentals, the money they could have made from leasing out their halls. Venue decorators also have much less on their hands to do, as they no longer have to decorate big halls.
According to Adebamibola, every single business in the chain has been affected, from caterers to ushers.
“Now, we even have to convince them to use one or two ushers for their events because they believe they don’t need ushers for 20 or 30 guests. Caterers cannot even cook a half bag of rice now because of the number of guests. This means that they are also paid less for their services, even if they expend the same energy and time” she said.
The new normal in this industry means that the things that used to be prioritized are no longer priorities. Hand sanitisers, face masks and hand washing equipment are now compulsories in events, while the hand-shaking, and hugs that would have characterized such weddings.
Due to the nature of the industry, a large percentage of the staff are kept on contract basis, so the reduction has not really translated into lay-offs. However, the industry revenue has been badly hit. A contract staff with NPU Events, who preferred anonymity, noted that in the last three months, she has only been called twice for events.
Since this forms a major part of her income, it has caused a major dip in her resources. COVID-19 has brought unwanted hardship to the Nigerian economy with small businesses and workers in the informal sector suffering the most.
A recent World Bank report indicates the Nigerian economy might contract by as much as 3% in GDP growth rate this year. This informed government’s latest decision to inject about N2.3 trillion into the economy to spur economic growth. The funds will be targeted at small businesses through non-collateralized low-interest loans. Whilst all these initiatives are geared towards stimulating the economy, the spending power of Nigerians will remain pivotal and as long as the pandemic persists, ceremonies will remain subdued.
BHH Podcast: What 2020 holds for SMEs (2) – Ugodre
Business Half Hour (BHH) is a weekly podcast targeted at Startups and Entrepreneurs, who are redefining the Nigerian business scene through innovation.
Business Half Hour (BHH) is a weekly podcast targeted at Startups and Entrepreneurs, who are redefining the Nigerian business scene through innovation.
In this episode of #BHH, Ugodre gave an insight into how business climate would be for SMEs and an overall outlook on the global and national economy. Enjoy!