• Sunday, April 21, 2024
businessday logo


Inflation: Consumer goods firms woo buyers with new flavours

Inflation: Consumer goods firms woo buyers with new flavours

Fast-moving consumer goods (FMCG) companies in Africa’s biggest economy are expanding their taste segments to boost sales amid rising inflation that is eroding purchasing power and soaring cost of doing business in the country.

This coping mechanism is in addition with other strategies such as the repackaging of products into smaller units (sachets) to make them more affordable.

A BusinessDay survey shows that some of the producers of consumer packaged goods such as noodles and synthetic hair attachments have joined alcoholic and non-alcoholic beverage manufacturers in pushing out more flavours to entice Nigeria’s youthful population, which forms a large segment of the consumer market.

“These products are amongst the top 10 spend priorities of the average young Nigerian. So, a lot of the FMCG companies are trying to adapt to the changing trends by way of innovation,” Uchenna Uzo, a faculty director at the Lagos Business School, said.

He said it is young people who dictate the pace and trends and that one cannot just retain them over time with only one product or two product categories.

“Sooner or later, their aspirations and income levels will change, making them look for something new. But if you have varieties or flavours at different prices and ranges, they can move up and down and still stay with the brand,” he said.

Uzo added that pushing out more flavours is a way of attracting some underserved segments of the market or discovering some new segments of customers.

Golden Penny Foods, a subsidiary of Flour Mills of Nigeria Plc, recently launched a new noodle flavour called Golden Penny Jollof Hot Hot Noodles. Last November, Dufil Prima Foods launched Indomie Jollof Chicken, a new addition to the list of its flavours.

Tropical General Investments Group, makers of Terra Seasoning Cubes, unveiled a new seasoning cube flavour, called Terra Jollof Cube, in February.

The new product is in addition to the rest of the company’s other flavours such as beef and chicken.

An article by Prepared Foods said that flavours create excitement in the market about the offerings as most consumers are interested in trying new flavours of old favourites.

Read also: CBN raises interest rate to 18% on rising inflation, fragile growth

“Flavour is important to everyone because it is a method to partner with your customer. It is an easily understandable pillar with which the consumer, retailer, foodservice operator, manufacturer and grower can identify,” it said.

Gbolahan ologunro, portfolio manager at FBNQuest, said that from a strategy perspective, companies have realised that consumers are price-sensitive and consumption in the economy is generally weak.

“By launching new flavours, from a consumer psychology perspective, there is that behavioural pattern you would expect from people to try out the new flavours,” he said.

Nigeria’s headline inflation rate rose for the second consecutive month to 21.91 percent in February 2023, the highest in 17 years, from 21.82 percent in January, according to the National Bureau of Statistics.

Food inflation, which is also at the highest in 17 years, increased to 24.35 percent in February from 24.32 percent in the previous month.

Various consumer goods firms in the country have introduced new flavours in recent years to increase market share.

In April last year, Aspira Nigeria Limited launched four variants of Viva Dish Washing Liquid in different flavours (Original, Anti-Bacterial, Sea Breeze and Zesty Lemon).

For the alcoholic drinks segment, Nigerian Breweries Plc introduced flavoured drinks such as Star Radler’s ‘Red Fruit’ and Citrus flavour, while Guinness Nigeria introduced Tigernut and Ginger flavour between 2020 and 2021.

In 2019, Pepsico introduced Pepsi Berry, Pepsi Lime and Pepsi Mango. La Casera Apple followed by introducing four new flavours – Bold Orange, Tropical, Bitter Lemon Extra and Ginger.

Read also: Consumer goods firms chase loans to finance short-term uncertainties

Coca-Cola Nigeria reintroduced its flavoured Fanta Apple and Pineapple Drink back into the market in 2019.

“This is something that is here to stay where you will continue to see brands evolve taste just to test the market and drive volumes both for alcoholic and non-alcoholic drinks,” Ayorinde Akinloye, an investor relations analyst at Seplat Energy Plc, said.

BusinessDay reported last year that some FMCG companies were repackaging products into smaller units (sachets) to make them more affordable. Although this is not a new trend, the high inflation rate in Nigeria is forcing many to adopt the practice as weak consumer purchasing power means higher demand for food and groceries in smaller packages.

“With food inflation rising consistently since the start of the year, retailers and consumers have been optimising for what they can afford,” Ignatius Akpabio, chief growth officer at TradeDepot, said last year.

According to him, everyone is trying to get the best value for their money, which often means buying smaller quantities more often. “Many brands are now offering smaller packages of their products or adjusting the size of existing products to accommodate consumer sensitivity to rising prices.”