Consumer goods firms report 32% decline in export revenues

Over a decade ago, the products of Nigeria’s fast-moving consumer goods sector were a toast in neighboring countries. Consumer goods firms attracted foreign investors who had wagered that the country’s robust demographics and rising middle class would continue to support growth.

Fast-forward to today, revenue generated from the export of consumer goods firms declined by 32.5 percent in the first quarter of 2023, according to data compiled by BusinessDay.

“The main challenge lies in the regulatory and policy hurdles as well as variations in consumer preferences across different markets,” Abiola Gbemisola, a consumer analyst at FBNQuest.

“Expanding to other markets poses difficulties for Nigerian consumer goods companies due to the lack of expertise in navigating these complexities. Adapting to the diverse tastes and preferences of consumers worldwide requires a deep understanding of each market’s dynamics, which may currently be lacking among Nigerian companies,” Gbemisola said.

Unlike other firms, Guinness Nigeria Plc experienced a growth of 12 percent. The company’s total revenue generated from exports increased to N1.67 billion in the first quarter of 2023, up from N1.48 billion in the same quarter of 2022.

“The increase in revenue from export for Guinness Nigeria Plc may be attributed to the production of certain products on behalf of their Ghanaian business,” Gbemisola said.

Gbemisola also noted that FMCGs are yet to recover from the 2019 border closure which had led to more focus on the Nigerian market.

“The lingering impact of the 2019 border closure continues to affect the Fast-Moving Consumer Goods (FMCGs) industry, with many companies still grappling with restricted access to other markets. Since the border closure, the industry has struggled to regain its previous level of activity,” Gbemisola said.

In the first quarter of 2023, there was a 13.4 percent increase in the total revenue generated from the Nigerian market. The revenue rose to N338.73 billion, showing significant growth compared to the N298.73 billion recorded in the same quarter of 2022.

“With time, it is expected that stability within the domestic economy will be achieved, resulting in reduced pressure on foreign exchange and a solid foundation. Once this stability is established, consumer goods companies can seize opportunities and expand their operations across various countries within the continent,” Gbemisola said.

Unilever Nigeria Plc

Unilever, the British multinational consumer goods firm, experienced a decrease in its export revenue, dropping to N0.48 billion in the first quarter of 2023 from N0.32 billion in the same quarter of 2022.

Within Nigeria, Unilever’s revenue amounted to N24.13 billion, reflecting a 19 percent increase in the first quarter of 2023 from N20.24 billion in Q1 2022.

However, the company’s total revenue saw a significant growth of 19.7 percent, reaching N24.6 billion in the first quarter of 2023 compared to N20.6 billion in Q1 2022.

The Food segment, comprising brands such as Blue Band, Knorr, and Royco, contributed significantly to this growth, with a 39.1 percent increase in revenue to N13.3 billion in the first quarter of 2023 from N9.6 billion in the same quarter in 2022.

On the other hand, the home and personal care products segment experienced a marginal growth of 0.1 percent, reaching N11.28 billion in the first quarter of 2023 compared to N11.26 billion recorded in the same period of 2022.

BusinessDay’s analysis also revealed that Unilever’s operating expenses rose by 45 percent, increasing to N11.89 billion from N8.2 billion.

Despite the increase in expenses, Unilever recorded a 49 percent growth in profit after tax, reaching N2.67 billion in the first quarter of 2023 compared to N1.79 billion in the corresponding period of 2022.

Nestle Nigeria