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 Plc, one of the largest food and beverage companies in Africa, experienced a significant 87 percent decrease in revenue generated from exports, amounting to N0.26 billion in the first quarter of 2023 compared to N2.03 billion in the same quarter of 2022.
Revenue from the Nigerian market contributed N127.71 billion to the total, reflecting an 18 percent increase compared to N108.2 billion in the same period.
However, Nestle Nigeria’s overall revenue witnessed a growth of 16 percent, reaching N127.97 billion in the first three months of 2023 from N110.23 billion in the corresponding period of the previous year.
The food segment accounted for 63.4 percent of the total revenue, amounting to N81.18 billion in the quarter under review.
Meanwhile, the beverage segment contributed 36.6 percent to the total revenue, amounting to N46.79 billion in the quarter under review.
Nestle Nigeria’s operating expenses grew to N23 billion from N16.84 billion, a 39.7 percent increase, primarily due to administrative costs and a 36 percent growth in marketing and distribution expenses.
In the unaudited results for the first quarter, Nestle Nigeria recorded a 10 percent drop in profit after tax, totalling N16.21 billion.
Cadbury Nigeria Plc, a food, sweets and drink company generated N0.49 billion in export revenue in the first quarter of 2023, compared to N0.46 billion recorded in the same quarter of 2022.
The firm’s confectioneries segment grew 14.8 percent to N3.9 billion in Q1 2023 from N3.42 billion in Q1 2022, while contributing 23.7 percent to total revenue.
In the Nigerian market, Cadbury Nigeria witnessed a significant increase in revenue, with earnings amounting to N16.07 billion in the first quarter of 2023, compared to N12.32 billion in the same quarter of 2022, reflecting a 30 percent growth.
Cadbury Nigeria’s revenue grew 29.7 percent to N16.6 billion from N12.8 billion driven largely by the beverages business segment, which contributed 70.3 percent of the revenue and grew by 28.2 percent to N11.64 billion in the first quarter of 2023 from N9.08 billion recorded in the same quarter of 2022.
Similarly, revenue from intermediate cocoa products jumped by 35 percent to N393 million in the first quarter of 2023 from N291 million recorded in the same quarter of 2022 with a marginal contribution of 2.4 percent to the revenue mix.
Operating expenses margin grew by 80 percent basis points to 10.3 percent in the first quarter of 2023 from 9.5 percent recorded in the same quarter of 2022.
For the first quarter ending on March 31, 2023, Cadbury Nigeria Plc’s profit after tax soared by 124 percent to N3.435 billion compared to N1.542 billion realized in the same period in 2022.
Guinness Nigeria, a renowned brewery in Nigeria and a subsidiary of Diageo Plc, achieved a 12.75 percent increase in revenue generated from exports, reaching N1.67 billion in the first quarter of 2023, compared to N1.48 billion in the same quarter of 2022.
In the Nigerian market, Guinness Nigeria experienced an 8.13 percent growth in revenue, amounting to N170.81 billion in the quarter under review, surpassing the N157.97 billion recorded in the same quarter of 2022.
For the nine-month period in 2023, the company’s revenue showed growth of 8.14 percent, totalling N172.48 billion, compared to N159.4 billion recorded in the corresponding period of the previous year.
However, Guinness Nigeria’s operating expenses increased to N44.4 billion in the period under review, up from N35.64 billion in the same period of 2022, with marketing expenses accounting for a significant portion of the reported amount.
Unfortunately, the company experienced a dip in profit after tax, recording a 61.6 percent decrease to N5.86 billion in the first quarter of 2023, compared to N15.27 billion recorded in the same period of the previous year.