BusinessDay
NigeriaDecides2023

Food vendors start to shake off COVID slump, face rising prices

The consumer food service industry saw total sales value improve by 18.6 percent to N5.1 trillion in 2021 from N4.3 trillion in 202, according to a new consumer report but the modest recovery could be stymied by rising food prices.

According to the report by Euromonitor International, a London-based market research company shared with BusinessDay, recovery is still at 1.9 percent lower than the 2019 rate and is yet to reach pre-COVID levels.

The consumer foodservice industry comprises cafés/bars, full-service restaurants, limited-service restaurants, self-service cafeterias, and street stalls/kiosks.

The report said during the year, all channels, but particularly full-service restaurants and cafés/bars benefited from the easing of restrictions imposed to limit the spread of COVID-19.

Middle- and high-income households continued to patronise limited-service restaurant outlets, while street kiosks continued to cater to lower-income groups with low-priced offerings.

“During the pandemic, we were one of the worst-hit because events were not taking place because for any event food is very important”, said Afolake Oba-Kasumu, public relations officer at the Association of Professional Food Service Providers of Nigeria.

“But the pandemic also made people think of innovative and creative ideas like doing packaged food. So, it was not all about the event industry again as people started catering for homes or people that cannot cook which brought out another area of business for the caterers,” Oba-Kasumu said.

In 2020, BusinessDay’s investigation into how restaurants were faring revealed between March-July, there was a 60 percent drop in sales due to a slump in food deliveries.

In March 2020, when the number of new cases of COVID-19 started to increase, restaurants limited dine-in table service to only 20 people.

Read also: Rising food prices require govt’s timely intervention

By April, when the Federal Government ordered a total lockdown, many restaurants closed. Others partially opened offering limited menu options.

After the lockdown was partially eased on May 4, the government directed them to offer only take-out services to their customers until full opening was allowed in August with the condition to maintain 50 percent capacity.

By December, foodservice outlets were allowed to fully open to the public and operate at full capacity.

“Since the lockdown measures and restrictions have been relaxed, we have been doing better than in 2020 because businesses have improved,” said Oluwafemi Odumuyi, head of marketing at Sweet Sensation Confectionery Limited.

The World Trade Organisation (WTO) ranks Nigeria the largest food market in Africa indicating a potential for further growth with significant investment in the local industry.

The food and beverage sector is estimated to contribute 22.5 percent of the manufacturing industry value, and 4.6 percent of the country’s GDP. The combined value of food and drinks is estimated at N16 trillion according to data from Euromonitor international.

The Euromonitor report also highlighted that the expansion of delivery services continued in 2021, with more local operators engaging in partnerships with Jumia Food, the major player in the online marketplace, which notably drove growing sales of local food.

According to the report, the growing promotion of local food online by the increasing number of food delivery companies triggered a rise in the demand for local cuisines in 2021.

The report also stated that despite the economic downturn caused by the pandemic, chained consumer food service operators continued to expand their outlets across Nigeria to meet the needs of consumers in various geographical locations.

For instance, Eat ‘n’ Go Ltd, Food Concepts Ltd and Sundry Foods Ltd, operating under the Domino’s Pizza, Chicken Republic and Kilimanjaro brands, respectively, aggressively expanded their number of outlets. Food Concepts Ltd also put more effort into smaller formats such as PieXpress, the report said.

“One of the most publicised developments in 2021 was the arrival of Burger King, which launched its first outlets in the Nigerian market during the year. The brand aimed to benefit from prospective growth in the population and economy, and changing consumer lifestyles,” the report concluded.

However, the Russia-Ukraine crisis has contributed to rising food prices with the soaring cost of diesel, wheat, and cooking oil and this could dent growth in the sector.

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