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Wholesale Retail Food industry Nigeria

The Wholesale and Retail of Food Industry in Nigeria 2019

Duncan Bekker | Nigeria | 03 December 2019

The Wholesale and Retail of Food Industry in Nigeria 2015

Ingi Salgado | Nigeria | 19 February 2015

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Report Coverage

This report focuses on the wholesale and retail of food in Nigeria and includes information on the size and state of the sector and the infrastructure, demand and conditions that support it. This includes the state of online retail and development of shopping malls. There are profiles of 16 companies that include major retailer Shoprite, suppliers such as Nestlé and Unilever and Nigerian players such as food manufacturer United Africa Company of Nigeria (UAC) and independent grocery chain Addide.

Introduction

This report focuses on the wholesale and retail of food in Nigeria. Nigeria is Africa’s largest economy and its most populous country and has a retail sector worth over US$100bn. Expectations of long-term economic and population growth have driven substantial interest from retail investors looking to secure a first-mover advantage in servicing the demand of a potentially huge consumer class. Formal supermarkets are growing from a very low base as the vast majority of food is still traded in the informal market. Nigeria has a significant infrastructure deficit and maintains a number of import regulations that complicate the supply chains of larger players. Since recovering from a recession in 2016, relatively slow economic growth has continued to put pressure on consumer spending.

Strengths

• A number of multinational market leaders are already present, with many more operating in the region.
• Food retail has upstream and downstream linkages to a number of sectors supported by government.
• Formal market concentration is very low, attracting investment from retailers and real estate players who wish to secure an early advantage.
• Nigeria is considered an investment hub for companies looking to expand into West Africa.
• Very large population and growing middle-class present food retailers with an attractive consumer base.
• While agro-processing is underdeveloped, Nigerian agriculture has the potential to supply a wide variety of food products.

Weaknesses

• High levels of informality complicate supply chains, requiring players to partner with local companies or develop entirely new networks.
• Nigeria is a net food importer and foreign retailers are reliant on imports to carry their full product range.
• Oil-dependent economy vulnerable to commodity price shocks.
• Poor trade and energy infrastructure significantly complicate supply and distribution, and can increase costs.
• Security concerns, including high levels of crime and terrorism.
• Shortage of skills.
• Strict import and foreign exchange regulations.
• Weak and corrupt institutions.

Opportunities

• Convenience and value-added services attracting consumers to formal supermarkets.
• Government support and increasing investment in agriculture and food manufacturing.
• Growing device and internet penetration and an increasingly youthful population driving the uptake of e-commerce.
• Increasingly dynamic middle-class driving demand in the formal channel.
• Ongoing investment in infrastructure.
• Ongoing investment in shopping malls.
• Potential for trade liberalisation and greater market access through continental free trade agreements.
• Technology enabling innovations in retail supply chains and consumer demand analysis.

Threats

• Consumer spending may be slow to shift to formal sector as Nigerians continue to primarily use informal markets.
• Continuing slow economic growth, rising unemployment, and double-digit inflation may keep consumer spending under pressure.
• Government expenditure assumes relatively stable international oil prices.
• Increase in security threats.
• Minimum wage and value added tax hikes may increase supermarket costs.
• Threats of more stringent foreign exchange and import controls undermining retailer confidence.

Outlook

The food retail industry is still feeling the effects of Nigeria’s recession, even as the wider economy slowly recovers. Despite GDP growth, consumer spending has remained under pressure due to rising unemployment, high inflation, and little real income growth. Shoprite has reined in its capital expenditure and expansion plans, citing the slow economy and supply challenges attributed to poor infrastructure and stringent foreign exchange and import regulation. While Spar and many local grocery chains are still expanding, the growth of retail outlets has slowed compared to the pre-recession period, and consumers have been relatively slow to shift their spending towards formal channels. The development of retail real estate is ongoing, but has also slowed, and the majority of new malls are below 10,000m2, targeting local businesses as tenants and servicing only basic consumer demand. While the online retail market continues to grow, confidence in the short-term viability of e-commerce has been shaken by widening losses and a number of divestitures. Nevertheless, supermarkets, food manufacturers, and real estate investors remain committed to the Nigerian market, highlighting the fundamental long-term opportunity of such a huge and potentially dynamic consumer class. Broll Nigeria states that 2019 has brought increased interest from a number of foreign companies looking to enter the market through partnerships with local players. South Africa’s Pick n Pay is set to enter Nigeria in the next year and existing retailers have invested in efficient distribution models and innovative marketing and value-added service offerings. Analysts and stakeholders suggest that, while the environment is likely to remain challenging in the short-term, Nigeria’s food retailers are well-positioned to take advantage of an economic upturn and long-term trends.

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The Wholesale and Retail of Food Industry in Nigeria 2019

Full Report

R 1 900.00(ZAR) estimated $99.18 (USD)*

Industry Landscape

R 1 330.00(ZAR) estimated $ 69.43 (USD)*

Historical Reports

The Wholesale and Retail of Food Industry in Nigeria 2015-02-19

R 1 900.00(ZAR) estimated $99.18 (USD)*

View Report Add to Cart

Table of Contents

[ Close ]
PAGE
1. INTRODUCTION 1
2. COUNTRY INFORMATION 1
3. DESCRIPTION OF THE INDUSTRY 2
3.1. Industry Value Chain 4
3.2. Geographic Position 6
4. SIZE OF THE INDUSTRY 7
5. STATE OF THE INDUSTRY 9
5.1. Local 9
5.1.1. Corporate Actions 20
5.1.2. Regulations 22
5.1.3. Enterprise Development and Social Economic Development 26
5.2. Continental 27
5.3. International 32
6. INFLUENCING FACTORS 34
6.1. Economic Environment 34
6.2. Shopping Malls 35
6.3. Poor Infrastructure 37
6.4. Labour 39
6.5. Environmental Concerns 40
6.6. Terrorism and Security 42
6.7. Technology, Research and Development (R&D) and Innovation 42
7. COMPETITION 44
7.1. Barriers to Entry 46
8. SWOT ANALYSIS 46
9. OUTLOOK 48
10. INDUSTRY ASSOCIATIONS 48
11. REFERENCES 49
11.1. Publications 49
11.2. Websites 49
APPENDIX 1 51
Summary of Notable Players 51
COMPANY PROFILES 53
ADDIDE LTD 53
ARTEE INDUSTRIES LTD 56
DRINKS AND FOOD WAREHOUSE INTERNATIONAL LTD 58
EKULO INTERNATIONAL LTD 59
FOODCO NIGERIA LTD 61
LEVENTIS FOODS LTD 64
MASSMART HOLDINGS LTD 66
MULTI-PRO ENTERPRISE LTD 72
NESTLE NIGERIA PLC 74
PAYMENTE LTD 77
PROMASIDOR NIGERIA LTD 79
PZ CUSSONS NIGERIA PLC 81
SHOPRITE HOLDINGS LTD 84
UAC FOODS LTD 89
UNILEVER NIGERIA PLC 91
WIGMORE TRADING LTD 94

Introduction

Nigeria’s US$99bn-a-year food retail sector is modernising rapidly. Shoppers with disposable income are swapping open-air markets for malls, convenience stores, supermarkets and online shopping. Despite vast infrastructural and distribution challenges for retailers, the formal food market is expected to continue encroaching heavily on the market share of the informal sector over the next few years. Foreign investors are attracted by Nigeria’s sizeable and growing middle class, which is the largest in Africa. In 2000, there were no supermarkets in the country; currently there are more than 30, and there is potential for further rapid penetration. Nigeria’s market leader in food retail is South Africa-based Shoprite, which obtained first-mover advantage when it opened its first store in Abuja in 2005 and envisions between 600 and 800 stores in the future.

Strengths

• Increasing foreign investment in food retail.
• The sector serves a population of 169.3 million people.

Weaknesses

• Corruption.
• Efficiencies are hampered by poor infrastructure.
• Lack of access to finance.
• Lack of varied food products due to import bans and high tariffs.
• Slow pace of securing and developing land for retail developments.
• Supply chain delays.

Opportunities

• Growing demand for convenience-type food which is typically stocked by supermarkets.
• Mobile technology innovation for online shopping.
• Nigeria has Africa’s largest middle class, which is still growing.

Threats

• Boko Haram insurgency.
• Fallout from lower oil prices may curb spending power and negatively affect economic growth.
• Political instability.

Outlook

The Nigerian food retail sector is expected to continue growing strongly. However, there are some immediate and medium-term risks, chiefly related to infrastructural challenges. In addition, on the political front, Nigeria’s presidential and legislative elections were postponed from February to 28 March and 11 April 2015 mainly because of the presence of Islamist extremist group Boko Haram in the north-east area. However, these political and security risks have not deterred investors in the rest of the country. In the words of Zambeef co-founder Francis Grogan, “Nigeria is a hard market to tap into, don’t let anyone tell you otherwise. That place is hard work… but it’s a market too large to ignore.”

The Wholesale and Retail of Food Industry in Nigeria 2015

Full Report

R 1 900.00(ZAR) estimated $99.18 (USD)*

Industry Landscape

R 1 330.00(ZAR) estimated $ 69.43 (USD)*

Historical Reports

The Wholesale and Retail of Food Industry in Nigeria 2019-12-03

R 1 900.00(ZAR) estimated $99.18 (USD)*

View Report Add to Cart

Table of Contents

[ Close ]
PAGE
1. INTRODUCTION 1
2. DESCRIPTION OF THE INDUSTRY 1
2.1. Industry Supply Chain 3
2.2. Geographic Position 5
3. SIZE OF THE INDUSTRY 6
4. STATE OF THE INDUSTRY 10
4.1. Local 10
4.1.1. Corporate Actions 13
4.1.2. Regulations 13
4.2. Continental 15
4.3. International 16
5. INFLUENCING FACTORS 18
5.1. Economic Environment 18
5.2. Lack of Infrastructure 19
5.3. Labour Resources 20
5.4. Information Technology 20
5.5. Environmental Concerns 21
6. COMPETITION 22
6.1. Barriers to Entry 23
6.2. Research and Development (R&D) 24
6.3. Innovation 24
7. SWOT ANALYSIS 25
8. OUTLOOK 25
9. INDUSTRY ASSOCIATIONS 26
10. REFERENCES 27
10.1. Publications 27
10.2. Websites 27
WHOLESALERS OF FOOD 29
Food Warehouse International Ltd 29
Leventis Foods Ltd 31
Massmart Holdings Ltd 33
Nestle Nigeria Plc 38
Promasidor Nigeria Ltd 40
PZ Cussons Nigeria Plc 41
UAC Foods Ltd 44
Unilever Nigeria Plc 46
Wigmore Trading Ltd 49
RETAILERS OF FOOD 50
Addide Supermarket Nigeria Ltd 50
Artee Industries Ltd 52
Food Warehouse International Ltd 54
Foodco Nigeria Ltd 56
Massmart Holdings Ltd 58
Multi-Pro Enterprise Ltd 63
Shoprite Holdings Ltd 65