The average price of sugar in Nigeria rose 103 percent in the first quarter of 2024 on a year-on-year basis.
Data from the National Sugar Development Council (NSDC) showed that the average sugar prices doubled to N16.76 million per metric ton in Q1 2024 from N8.24 million per ton in the corresponding quarter of 2023, indicating a 103 percent increase.
Experts say the country imports about 98 percent of its sugar needs and attributed the sharp rise to the depreciating and volatile naira.
The naira has tumbled by 191 percent from June 2023 at the Nigerian Autonomous Foreign Exchange Market, also known as the official market, further mounting FX pressure on sugar manufacturing companies who rely on cane sugar imports.
Globally, sugar prices are dropping in the international market.
The FAO’s sugar price index declined 7.5 percent to 117 points in May from 127 points in April. This represents the third consecutive monthly decline, with the index down 25.5 percent (40 points) from its value last year and standing at its lowest level since January 2023.
“The drop in international sugar price quotations in May was mainly driven by the good start of the new harvest season in Brazil, which was bolstered by conducive weather conditions contributing to an improved global supply outlook,” the United Nations said in its report.
A recent CardinalStone report on sugar, states that while global sugar prices are declining, FX pressures along with fluctuating naira pose a challenge to the overall price of its sugar products.
“In isolation, this moderation in raw sugar prices is expected to have a positive pass through to DANGSUGAR’s raw material costs. However, we note the potential drags from domestic macroeconomic challenges such as FX volatility and high inflationary pressures,” it said.
Also, while global sugar prices are declining owing to improved harvest in Brazil – Nigeria’s largest trade partner in the import of cane sugar – prices of the item have continued to soar in the country due to foreign exchange (FX) volatility and inflation influence.
A source who does not want her name mentioned in print told BusinessDay that due to the rising cost of sugar along with other prevailing economic situations, American Cola, another beverage brand in Nigeria increased the price of its pack of 12 cola from N3,150 last year to N3,250 in 2024.
Coca-Cola Bottling Company, a top beverage brand, increased the price of its plastic bottled drinks at the beginning of the year to N300 from a steady price of N250 in 2023. It however increased the price again by 17 percent to N350 depending on location.
Similarly, Pepsico, another beverage brand, has revealed plans to increase the prices of its products by 29.5 percent from N3,190 for its regular RGB pack to N4,130 on the back of prevailing economic situations.
An NSDC survey report shows that personal sugar consumption is less than 20 percent, while industrial consumption by soft drinks, food and beverage sector, bakery and confectionery, and pharmaceutical industry is the largest.
