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Rising chocolate demand: Opportunity for Africa

While other major commodity prices softened on the back of a stronger dollar and the impact of changing market dynamics (demand & supply), cocoa finished 2018 27% stronger after being subdued for two consecutive years.

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Chocolate

2018 was quite a good year for cocoa farmers and investors, as cocoa prices firmed up. While other major commodity prices softened on the back of a stronger dollar and the impact of changing market dynamics (demand & supply), cocoa finished the year 27% stronger after being subdued for two consecutive years.

Increased production in Ivory Coast and Ghana (boosted by favourable weather conditions) fueled the high global supply of cocoa over the 2016/2017 season, resulting in a slump in cocoa prices at the time. The record low-pricing on cocoa (a ten-year record low) resulted in much stronger demand for cocoa bean seeds and supported the commodity’s 2018 price rally.

[READ ALSO: Why A Drop In Inflation Does Not Necessarily Mean A Drop In Prices Of Commodities]

So far this year, prices have continued to firm further due to a confluence of demand and
supply factors. On the supply side, key producers (Cote d’Ivoire and Ghana) had threatened to stop selling their products to buyers unwilling to meet a minimum price floor of US$2,600/ton, compared to the International Cocoa Organisation’s average price of
US$2,436/ton.

Although the stakeholders in the cocoa value chain have since agreed to the price floor, the key producers still went ahead to suspend the sale of cocoa beans to the open market under the 2020/2021 crop season until further notice for preparation of the implementation of the floor price. This has created artificial scarcity for cocoa beans in the market and supported a rise in price as both countries account for 60% of global cocoa supplies.

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On the demand side, the price of cocoa is being supported by increasing chocolate consumption in emerging markets. In the past, chocolate used to be considered an exotic
product to EM consumers. The current trend in EM consumption patterns reveals gradually
increasing chocolate consumption, particularly during festivities.

In China for instance, during the Chinese New Year or Valentines’ Day celebrations, half of the top ten items sold in the food and beverage category are chocolates and chocolate products. Eurostat also confirmed that emerging markets are lifting chocolate sales volumes. The agency identified the ten fastest-growing chocolate markets in the world and all the listed countries were emerging markets including India, Algeria, and Nigeria.

[READ MORE: The bears have gripped Total Nigeria]

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In our opinion, the potential for growth in chocolate sales in emerging markets is highly
attractive and could lead to major investments by the big players in the chocolate industry
in Africa where 65%-70% of global cocoa beans are sourced (Cote d’Ivoire, Ghana, Nigeria,
Cameroon and Togo). Such investments in a country like Nigeria can create opportunities
for employment while improving the standard of living of the citizens.

That said, attracting investments into Nigeria will largely depend on the ability of the government to create an enabling environment for foreign direct investments.

_______________________________________________________________________

CSL STOCKBROKERS LIMITED CSL Stockbrokers,

Member of the Nigerian Stock Exchange,

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First City Plaza, 44 Marina,

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PO Box 9117,

Lagos State,

NIGERIA.

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Business News

Nascon Allied Industries Plc: Increase in sale of goods boosts revenues

Nascon Allied Industries Plc recorded a boost from an increase in the sale of goods revenue-generating unit

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Nascon Allied Industries Plc recorded a boost from an increase in the sale of goods revenue-generating units, as total revenues increased slightly. The company reported revenues of N21.87 billion in 2020 (9months) – 4.01% increase compared to N21.03 billion in the corresponding period of 2019.

What you should know

Key highlights from 2020 (9months) results

  • Revenues increased by 4.01% from N21.03 billion to N21.87 billion YoY.
  • Revenues from sale of edible, refined, bulk grade salt; seasoning and vegetable oil, increased to N21.87 billion, +22.53% YoY.
  • Other income increased to N12.81 million, +27.43% YoY.
  • No revenue was recorded for freight income on the deliveries of salt and seasoning income-generating unit.
  • Gross profit increased to N8.96 billion, +74.56% YoY.
  • Operating profit increased to N3.64 billion +18.60% YoY.
  • Pre-tax profits increased to N3.47 billion, +16.63% YoY.
  • Post-tax profits increased to N2.29 billion, +13.27% YoY.
  • Earnings Per Share increased to 115 kobo, +12.75% YoY
  • Total assets increased to N44.36 billion, +45.79% YoY.
  • Total liabilities increased to N32.04 billion, +67.21% YoY.
  • Total equity increased to N12.32 billion, +9.35% YoY.

(READ MORE:Dangote’s NASCON Allied Industries Plc moves operation from Apapa)

Bottomline

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Nascon Allied Industries Plc recorded a boost from increase in sale of goods revenue-generating unit, but no revenue was recorded for its freight income on the deliveries of salt and seasoning revenue generating-unit.

Though companies have generally recorded decreased revenues in the last three quarters, mostly due to COVID-19; Nascon Allied Industries Plc was able to increase its total revenues and pre-tax profits in the period under consideration.

 

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Tech News

Instagram disables its “Recent” feature

Instagram recently announced it had removed the “recent” tab from hashtag pages on a temporary basis

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COVID-19: Instagram cracks down on coronavirus AR effects, Instagram Tenders apology for fagging #EndSARS fake, Instagram has disabled the “Recent” feature for the forthcoming U.S election,

Instagram disclosed that it would remove the “Recent” tab from its hashtag pages for people in the United States of America.

The social networking and video sharing service stated this on its official Twitter handle. It said it is “doing this to reduce the real-time spread of potentially harmful content that could pop up around the election.”

What you should know

Nairametrics had reported on Instagram’s apology for its algorithm malfunction that led to the flagging of #EndSARS posts as fake.

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Instagram has also taken the following measures to ensure a successful November election.

  • The registration of 4.4 million votes this year through its flagship platform – Instagram and Messenger.
  • Serving as a means of information and tool to people in the US on the electoral process
  • The ban of any content that can thwart the success of the election.

(READ MORE:U.S dollar stable amid U.S holiday)

Mark Zuckerberg, the CEO of Facebook, said he was perturbed about the high risks for civil unrest in the US due to the upcoming presidential election.

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“I’m worried that with our nation so divided and election results potentially taking days or weeks to be finalized, there is a risk of civil unrest across the country.”

Furthermore, he disclosed on a call while discussing Facebook’s Q3 earnings, that “given this, companies like ours need to go well beyond what we’ve done before.”

Why this matters

The aim of the short-term decision is to decrease the spread of misinformation in the forthcoming US election.

 

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ENDSARS

#EndSARS: Police did not shoot protesters – IGP Adamu

The IGP has said that police officers acted professionally and exercised commendable restraints during the #EndSARS protests.

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The Inspector-General of Police, M.A Adamu, has said that officers of the Nigeria Police Force acted professionally and exercised commendable restraints during the protests, in a response to Amnesty International about police firing at protesters.

The IG disclosed this in a statement on Friday morning, saying reports on the shooting of protesters is not true.

What you should know

Amnesty International released a report on the 21st of October, 2020, saying it has confirmed “that the Nigerian army and police killed at least 12 peaceful protesters yesterday at two locations in Lagos. The killings took place in Lekki and Alausa, where thousands were protesting police brutality as part of the #EndSars movement.”

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President Muhammadu Buhari also disclosed last week that 51 civilians, 11 Police officers, and 7 soldiers have been killed in the unrest.

The IGP said today that, “Officers of the Nigeria Police Force acted professionally, exercised commendable restraints and some paid the supreme price for peace during the recent protests and ensuing violence in some parts of the country.

“The Amnesty Int’l report is untrue, misleading, and contrary to all available empirical evidence.

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“Even when the protests turned violent in some parts of the country, the officers still maintained utmost restraint and did not use excessive force in managing the situations.”

The IG added that 22 Police personnel were killed by hoodlums, with many more injured and that 205 police stations were attacked.

“Available reports show that twenty-two (22) police personnel were extra-judicially killed by some rampaging protesters and scores injured during the protests. Many of the injured personnel are in life-threatening conditions at the hospital.

“Two hundred and five (205) police stations and formations including other critical private and public infrastructure were also damaged by a section of the protesters,” he said.

The IG said Amnesty International failed to pay tribute to police officers who lost their lives in the violence and accused the organization of “discriminatory tendencies.”

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