Nigeria’s rapidly growing population is giving life to the baby food market, which has to ensure an estimated 7 million babies born in Nigeria every year are properly fed.
Nigeria currently has a population of 211 million, which according to the United Nations is projected to increase by 90 percent to 401 million by 2050. The United Nations Children’s Emergency Fund (UNICEF) notes that at least 7 million babies are born in Nigeria yearly, with the country currently having an annual growth rate of 2.6 percent.
As a basic need, food is essential for babies in order to help them develop properly, hence regardless of the high poverty rate, the rising population still translates into a profitable market and increased sales for makers of baby food within and outside Nigeria.
According to Ken Research in its Nigeria Baby Food Market Outlook, the Nigerian baby food market has a promising future and is expected to reach over N200 billion by 2023 on the back of high birth rate and fertility rate.
“The future of Nigeria baby food market looks quite promising given the positive growth and development indicators, the market is expected to register a positive CAGR of 11.6 percent in terms of the revenue generated during the review period 2018-2023,” according to the outlook.
Newer baby food products such as specialised baby food for infants with allergies, colic, premature babies, regurgitation and other such issues might be launched in near future,” it states.
Leveraging this, companies like Nestle, Danone, Friesland Campina, among others, are already enjoying steady patronage from the Nigerian baby food market while investment experts believe there are untapped opportunities in Nigeria’s baby food sector that investors can tap from given the available resources and a promising market.
Some notable baby food products include baby milk that acts as an alternative to breast milk, and cereal examples include SMA Gold, Aptamil, NAN, Lactogen, Nutribom, Gerber, Peak 1,2,3, Cerelac, My Boy, etc. These products have a minimum price of N1,500 and go as high as N9,000, depending on the type and brand.
Oladejo Tokunbo is a mother of a seven-month-old baby, she spends N20,000 on baby food monthly. She uses cereal from a well-known brand that costs N2,500 per 400gm and lasts between three and five days; hence she buys the cereal weekly.
For households with incomes below average, they have the option of purchasing the locally made cereal, also known as Tom Brown cereal, with prices ranging between N300 and N5,000.
Nestle Nigeria, the largest listed fast-moving consumer goods company on the Nigeria Stock Exchange, primarily produces and sells food and beverages, its parent company Nestlé S.A. headquartered in Switzerland is the largest food company in the world, measured by revenue and other metrics.
BusinessDay analysis of the company’s financial statement shows that its revenue is gotten from the sale of its food and beverage product. Its food products consist of Maggi, Cerelac, SMA, NAN, Lactogen, and Golden Morn, while its beverage products are Milo, Milo Energy Cube, Nescafe, Milo Ready-to-drink (RTD), and Nestlé Pure Life.
Over the years, the company’s food revenue has increased consistently and significantly, except in 2020 when the covid-19 pandemic hit. Between 2015 and 2020, the contribution of the company’s food products to its revenue hovered between 59.7 percent and 63 percent.
In 2015, income from food contributed N90 billion (59.7%) out of total revenue of N151 billion, and in 2016 it contributed N113 billion (62.3%) to the N181 billion realised during the period.
In 2017 and 2018, the food segment retained its position as a major contributor with 63 percent, after making N154 billion and N168 billion, respectively, out of the N244 billion and N266 billion realised during this period.
In 2019, the segment contributed N176 billion (62%) out of N284 billion revenue achieved. In 2020, it contributed N171 billion (59.81%) to the total revenue of N287 billion.
Although Euromonitor’s Baby Food in Nigeria report affirms Nestle as the market leader in the baby food category and accounts for more than half of overall value sales, particularly Cerelac and NAN, it notes that it is beginning to lose customer loyalty to other cheaper brands.
“The shift towards organic baby food is being observed on the back of increasing health awareness among parents and rising purchasing power of households. Many new local companies have entered the market with their own organic baby food products for different income groups,” Ken Research states.
The shift in consumer loyalty is particularly prevalent in the cereal segment. This is because parents prefer to use affordable and nutritious packed cereals for their baby, such as the Tom Brown cereal.
The Tom Brown cereal is a local cereal made from a combination of organic commodities obtained from yellow maize, soybean, millet, guinea corn, crayfish, pepper, kuli-kuli (a local snack), dry fish, groundnut, etc. all of which are roasted and dry blended.
The Ken Research further reveals that the adoption of innovative and organic baby foods has increased among parents, the shift towards organic baby food is observed on the back of increasing health awareness and purchasing power of households, which has encouraged the demand for flavoured baby foods and other variants.