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Nigeria’s champagne import hits 7-year low on Covid, weak purchasing power

Nigeria’s champagne import hits 7-year low on Covid, weak purchasing power

The consumption of champagne in Nigeria hit the lowest in seven years in 2020 as the economic lockdown and weak purchasing power have reduced consumer appetite for luxury items.

Nigeria is the biggest champagne market in Africa. The drink is used in parties, festivals and other events as a symbol of luxury and glamour.

Nigeria’s consumption of champagne imported from France has dropped by 60 percent compared to 2014 levels, according to data compiled by Comité Champagne, a trade association that tracks volume and value of champagne exported from France.

The data showed that Nigerians swigged 304,199 bottles in 2020, from 569,440 bottles in 2019 and 768,131 bottles consumed in 2014.

“Clearly, economic pressures on consumer income have weakened appetite and affordability for luxury products. Thus, it is expected that demand for luxury items would dip,” said Ayorinde Akinloye, an analyst at United Capital Plc.

The COVID-induced economic lockdown in the most part of the second quarter of 2020 which led to the closure of bars, clubs, and restaurants has accelerated the shrinking of the champagne imports.

The consumption of champagne in Nigeria fell 46 percent to 304,199 bottles in 2020 from 569,440 in 2019.

“This is not necessarily because of the drop in consumer spending,” Abiola Gbemisola, consumer analyst at FBNQuest, said. “Champagne is a social drink used to celebrate events. As a result of the lockdown even if people celebrated, it wasn’t physical, I would directly attribute the decline to the lockdown to than the economic recession.”

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“If there was no lockdown, champagne will always command buying interest from the high social class. The elasticity of demand for champagne is low, this means people will not react based on a change in price because it is a luxury good,” Abiola said.

Despite being a luxury good, the fall in champagne import has coincided with periods of economic downturn. In 2014, the Nigerian economy grew at 6.3 percent and champagne import hit its highest.

However, with the economic recession that hit the country in 2016, the economy contracted by 1.6 percent and champagne consumption fell to 475,726 bottles that year.

As the economy began to recover growing 0.8 percent, 1.9 percent, and 2.2 percent in 2017, 2018 and 2019, imports grew 593,097, 582,243 and 569,400 bottles respectively during the same periods.

This shows that consumers realign their consumption pattern to fit into economic reality as the volume of champagne imported into the country has remained below 2014 levels.

Nigeria has recorded a negative Per Capita GDP growth rate in the last six years which means many Nigerians are poorer and are consuming fewer luxury goods.

According to the report by Comité Champagne, the decline in champagne export from France declined worldwide. This means other countries also imported less champagne.

“Champagne exports worldwide stood at 244.1 million bottles, down by 17.9 percent compared to 2019. The closure of bars and restaurants, restrictions on celebrations and the cancellation of numerous events have curtailed Champagne sales and consumption, often drastically,” the report stated.