Here are what to expect from consumer goods firms in 2025

The Nigerian consumer goods sector was confronted with significant challenges in 2024 which include heightened inflation, FX volatility, and declining consumer spending.

Despite these headwinds, companies demonstrated resilience through strategic pricing, portfolio diversification, and enhanced distribution.

However, 2025 being a new year poses two sides of a coin possibility – the firms will soar against the challenges again or have a safe landing in a conducive economic climate to scale up their businesses.

Oluebube Nwosu, while speaking in an interview with News Central titled ‘Nigeria’s consumer goods sector in 2025’ said there will be stabilisation of macroeconomic headwinds.

“FX will be much more stable, there will be a mild recovery in consumer goods firms’ gross margins and Earnings before interest and taxes,” he said.

Uchenna Uzo, professor of marketing at Lagos Business School said in 2025, consumer goods firms will have some difficulty because inflation is still going to be high even if the projection is that it wont be as high as it was before.

“We anticipate more stability in the exchange rate, hopefully the fuel prices will not be changing as often as they did. Therefore consumer goods firms will be very cautious about their cost and not be wasteful. Some will close down some product lines they have before which are unprofitable or the new products launched last year which failed will be removed.”

Some consumer goods firms will take a look at their pricing strategy given the situation of the economy, now pricing has to go with value which will be different from what the consumer goods firms were offering before.

Muda Yusuf, the CEO of Centre for the Promotion of Private Enterprises (CPPE) said some consumer goods firms exited to scale down operations in 2024, however, this year we expect that the macroeconomic environment will be better.

“Some FMCG will have to drop their prices to drive growth which will depend on what happens to the key inflation drivers dissipate or slow down, such as the exchange rate which is looking a bit more stable now and energy prices is also looking stable now,” he said.

Yusuf stated that the reduction in energy prices may result in drop in prices for the consumer goods firms because the FMCG environment is a highly competitive environment and if the pressure reduces it is possible that their prices go down.

“If the macroeconomic condition remains the same then many of the consumer goods firms will have to struggle,” the renowned economic analyst said.

Vetiva Capital Management Limited’s consumer goods outlook report for 2025 stated that growth is projected to be positive but tempered by the prevailing macroeconomic environment this year.

“Firms are likely to sustain revenue growth by implementing strategic price increases and penetrating adjacent markets. Essential goods producers are expected to outperform, as consumers prioritise staples amid constrained disposable income,” it said.

Vetiva’s report stated that discretionary goods may experience slower volume growth due to weakened purchasing power. “Companies with optimised distribution networks and competitive pricing will likely outperform their peers.

“Profitability across the sector will remain under pressure due to the volatile macro environment. Modest margin recovery is possible with FX stabilisation, alleviating imported input costs. However, substantial margin improvement hinges on a significant improvement in the broader macroeconomic landscape,” it said.

Analysts at Vetiva Capital Management Limited said while 2025 is expected to remain challenging, value investors may find compelling opportunities in established players like Nestlé, and Nigerian Breweries (NB).

“Growth investors may find Unilever attractive, given its strong YtD performance and continued growth momentum, following its restructuring. Strategic and opportunistic investors may find opportunities in Guinness and International Breweries (INTBREW), each with unique characteristics,” they said.

“Guinness offers potential gains, given its strife to play in the value segment following the exit of Diageo. Additionally, we expect investors to maintain a long-term horizon on INTBREW, as it continues with its push for market share, especially now that it has regained operational profitability,” they added.

Chapelhill Denham sector update for Consumer Goods firms titled ‘Challenging 2024, Promising Outlook in 2025’ stated that outlook for revenue growth is positive for the FMCGs, considering the room for further price increases as well as other strategies to drive sales growth.

“FMCGs have been investing in production systems as well as optimising capacity utilisation, expanding existing production lines as well as improved product innovation to satisfy consumer needs and preferences, and expanding distribution networks,” analysts at Chapelhill Denham said.

They further stated that it is imperative that for FMCGs to see better EBITDA margins, raw materials should be sourced locally where possible and efforts towards backward integration should be strengthened to reduce reliance on FX for the importation of raw materials.

On a global basis, an EIU report titled ‘Consumer Goods and Retail Outlook 2025’ stated that “in 2025 easing inflation will help global retail volumes grow by an expected 2.2 percent, but consumer confidence will remain weak.

“India will emerge as the new dominant force in the sector, with China’s growth slowing. Regulatory pressures, such as tariff exemptions, will create challenges for online retailers. Spending on essentials and leisure will rise, but categories like furniture and white goods will lag,” the report said.

The CardinalStone’s 2025 economic outlook report reveals that Nigerian companies in the consumer goods, cement, and telecommunication sectors are projected to grow fastest through consistent balance sheet restructuring and de-leveraging exercises in 2025.

It stated that de-leveraging exercises, which started in 2024, are expected to continue in 2025 among companies looking to recover from reform-induced pressures and strategically de-risk their businesses from future FX and interest rate uncertainties.

According to Investopedia, balance sheet restructuring refers to an action taken by a company to significantly modify its financial and operational aspects, usually when the business is facing financial pressures.

De-leveraging exercises occur when a company attempts to decrease its total financial leverage to pay off existing debts and obligations on its balance sheet.

Afrinvest’s report titled ‘Beyond the Rhetorics: Transforming Reforms to Tangibles’ said the consumer goods sector is among the sectors that will aid Nigeria’s economic growth.

“The sectors that will aid Nigeria’s economic growth are agriculture, oil & gas, consumer goods, industrial goods, banking, and telecommunication,” it said.

Afrinvest’s Nigeria Economic and Financial Market Review of 2024 and 2025 Outlook has projected that six major sectors are poised to boost the Nigerian economy this year.

The consumer goods sector’s near-term outlook remains cautiously optimistic with several domestic and global challenges likely to impact growth, inflationary pressures, FX volatility, and geographical factors are expected to continue influencing consumer spending patterns.

Overview of 2024 financial performance