There’s hardly a shortage of reports on companies that have been on the receiving end of Nigeria’s stuttering economy, but the success stories of others who have thrived in the midst of the downturn manage to slip away quite frequently.
One of such companies is Turkish conglomerate and fifth-largest diaper manufacturer in the world- Hayat Kimya, makers of Molfix baby diapers.
Hayat Kimya took a big gamble in 2015 when it decided to invest $100 million in a tissue and diaper factory in Nigeria.
This was a time of prolonged global oil price plunge which threatened the economic stability of Africa’s largest oil producer. The signs were there that Nigeria was set for a sharp downturn which would eventually materialise in 2016.
The poor economic indicators at the time derailed several investments into Nigeria, as evidenced by the decline in foreign direct investments that year, according to data agency, National Bureau of Statistics (NBS).
From $2.3 billion in 2014, FDI into Nigeria slumped 39 percent to $1.4 billion in 2015 and a further 28 percent to $1.0 billion in 2016.
The drastic plunge was for good reason.
The economy had slipped into its first recession in 25 years while inflation spiralled out of control on the back of acute dollar shortages caused by the global rout in oil prices.
The profits of Fast Moving Consumer Goods companies tanked rapidly as rising operation costs combined with lower sales volumes to hurt their bottom lines.
Nigerians were consuming less, owing to falling average incomes. The average Nigerian now earned less than $2,300 from around $3,000 in 2014.
With Nigeria’s uncertain future tainted by expectations for low economic growth and weak consumer spending, it made sense for foreign direct investors to be a little hesitant about Nigeria.
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It wasn’t the case for Hayat Kimya, who saw an opportunity amid adversity and took a gamble by setting up shop in the country in 2015.
The company’s Agbara factory sits on a 200,000 square-meter plot of land in the south-western Ogun state, and has the capacity to produce 1.3 billion units of diaper and 13,000 tonnes of tissue per annum. The diaper manufacturer has 14 such factories across the 14 countries it operates in.
Today, that gamble looks to be paying off.
Molfix hasn’t made data on revenues publicly accessible but a survey by BusinessDay gave some insight into how the company has grown market share since its recent launch in Nigeria.
Two in every three nursing mothers interviewed last month by BusinessDay used Molfix for their babies.
Of the 100 people, primarily Lagos residents, captured in our modest survey, 67 of them used Molfix with Huggies, Pampers and other brands accounting for 33 percent.
A 2017 report by AC Nielsen, showed that Molfix controlled 44 percent of the diaper market share at the time, eclipsing Pampers, with 37.3 percent, on its way to becoming the market leader.
“Nigerians prefer the cheaper option,” said Andrew Alli, former President and CEO of the Africa Finance Corporation.
“(The makers of Molfix) apparently stole Pampers’ lunch with a much cheaper product,” Alli said.
For Molfix and some other consumer goods companies that are able to appeal to the price sensitivity of Nigerians, their success has been irrespective of the economic downturn that has rocked many other companies.
And there could yet be more success to come.
By 2050, the country will boast the third largest population globally and would have as many people as Germany, The United Kingdom and France combined.
When Molflix first made its foray into Nigeria, it looked an impossible task to knock Huggies and Pampers off their perch.
For a long time, Pampers, the baby diaper brand of Procter and Gamble (P&G), has been the market leader in Nigeria, trailed by Huggies, a product of Kimberly-Clark, who held forte as second.
However, with average incomes shrinking, Nigerians are fast switching to the Turkish diaper to save cost.
Perhaps the fact that both P&G and Kimberly Clark have both closed their local diaper plants may have also aided Hayat Kimya in gaining some ground over its rivals.
For the bulk of Nigerian consumers who are increasingly switching to cheaper substitutes for everything from alcoholic beverages to clothing, Molfix makes a compelling case- it is first cheap and of some good quality.
Dupe John, a store owner in the heart of Idumota, says she stocked her store with Molfix when she noticed “no one was buying anything else.”
“They (her customers) tell me that they prefer it to the other ones because it is pocket-friendly,” she said.
