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.