As a result of a growing population and an emerging middle class, there has always been a growing demand for fast moving consumer goods (FMCG) in Nigeria. However. as a result of the economic downturn and subsequent slow recovery, the manufacturing sector in 2017 declined marginally by 0.2 percent. Growth in the segment has been hampered by weak purchasing power of consumers leading to decline in revenues. This, coupled with forex illiquidity on account of oil price-supply volatility resulted in high cost of inventory and production translating to eroded profits.
Despite the nation’s fragile economy, Nestlé Nigeria Plc surmounted the financial headwinds that led to declined growth and exit of many manufacturing companies from the industrial sector and the country. The company’s latest financial report reflects that the Company recorded growth of 34 percent for the year ended December 31, 2017.
The Food & Beverage manufacturer continues to withstand the challenging business environment brought on by weak consumer spending, rising input costs and currency depreciation. The food and beverage (F&B) sector with GDP of N2.8 trillion in 2017 is the largest segment of the Nigerian manufacturing industry accounting for 44 percent of manufacturing GDP. In 2017, the F&B sector grew marginally by 2 percent from 2016.
Nigeria remains one of Africa‘s biggest food importers – despite high investments in local food production. This has impacted negatively on sectoral growth, as players continue to invest significantly on backward integration and capital expansion projects to capture and increase market share.
Nestlé’s turnover in 2017 exceeded the GDP growth of 11 percent recorded by its Industry in the period under review. Five-year average sales growth for Nestlé of 16 percent also outperformed the GDP growth in the Food, Beverage and Tobacco sector for 2017.
The result also compares with the Company’s year on year sales growth of 20 percent in 2016 when the country entered into its first recession in 25 years. It is safe to suggest that Nestlé was positioned to withstand the macro-economic shocks brought about by the recession.
Nestlé Nigeria has developed three commitments encapsulated in the Company’s core purpose of ‘enhancing quality of life and contributing to a healthier future.’ The first commitment is helping Nigerian families lead healthier lives, working alongside stakeholders and partners to improve livelihoods, and providing access to clean drinking water in the communities in which it operates.
The company works towards its commitments by aiming to provide quality and nutritious meals that are accessible to all “purse sizes.” Today, over 80 percent of the total volume of products the company manufactures and markets in Nigeria is fortified with micronutrients to help address malnutrition.
Nestlé is innovating and renovating its products to meet consumer expectations. The Manufacturer’s strategy of seeking to offer healthier products adapted to the taste and nutritional needs of local consumers is paying off.
The firm launched two new products in 2017 – the first – the Milo Ready-To-Drink beverage, and the second – Maggi Naija Pot was launched to consolidate the brand’s dominance of the Nigerian culinary market.
Going into the current year, Nestlé has continued to focus on demand creation activities for its existing products while enhancing its portfolio. In February 2018, the Company launched Nestlé Golden Morn Puffs – a multi-grain cereal made from maize, millet, oats and soya. Golden Morn Puffs is fortified with GRAINSMART, a unique combination of vitamins and iron.
Nestlé seeks to increase the use of locally sourced raw materials through close collaboration with governments, research institutes and agricultural communities; particularly in maize, sorghum, soya beans and cassava. Efforts towards increasing local sourcing over the past 6 years have resulted in an average of 80 percent of raw materials being sourced locally for the Company’s products and brands. Currently, over 41,600 farmers supply grains and legumes to Nestlé’s factories.
In addition to providing a steady source of income for the farmers, the company works alongside partners like IFDC, USAID, VEGA and CPNFA to help the farmers increase productivity and improve crop quality by reducing contaminants. These efforts seek to enhance food safety especially in maize and soybeans, thereby increasing the income of the farmers and ensuring a steady supply of high quality grains to meet Nestlé’s production standards.
Nestlé Nigeria Plc announced its financial results for H1 2018 which shows that the Company continued its momentum from 2017 delivering a revenue of N135.3 billion for H1 2018, a growth of 11% over H1 2017. Profit after tax is N21.5 billion compared to N16.5 billion in the corresponding period of the previous year.
Commenting on the results, Mr. Mauricio Alarcon, MD & CEO of Nestlé Nigeria Plc said, “We are pleased with the sustained growth of our Company amid the competitive business landscape. These results were possible thanks to the relentless efforts of our highly passionate team to provide high quality and affordable nutritious food and beverages to Nigerian consumers.”
On the outlook for the second half of the year, Mr. Alarcon said, “We will maintain the focus on delighting consumers with our nutritionally superior products by increasing promotion initiatives and providing more nutrition education. In line with our Creating Shared Value principle, we remain committed to building thriving and resilient communities through local sourcing, expanding the commercialisation of our products and strengthening our value chain.”
Nestlé’s investments over the last five years include N74 billion on manufacturing plants comprising a N4.8 billion Water Factory in Abaji, FCT Area Council. In addition to capital investments, the Company has also channeled N4 billion towards its CSV programmes and projects across the country.
Nestlé has been operating in the country for over 57 years. With a staff strength of over 2,200 direct employees, 3 manufacturing sites, 8 branch offices and a head office located in Lagos, Nestlé produces and markets several brands including Maggi, Milo, Golden Morn, Cerelac, Nescafé and Nestlé Pure Life. Overall, the sector generates over 1.5m jobs in the country and thus employs 5 percent of the country’s workforce.
