Gain Report - Nigeria: Retail foods - steady growth of Nigeria’s retail food sector

Report Highlights: Nigeria's retail food imports are estimated at $750 million in 2010 and projected to increase by 20 percent in 2011. Changing demographics and lifestyles are resulting in increasing consumer demand and preference for packaged retail foods. Domestic food processing is underdeveloped and there is greater reliance on imports. The EU, Asia and South Africa suppliers are dominant. Despite greater challenges, U.S. exporters should persevere doing business here. As business relationships with Nigerian firms endure, the apprehension of doing business in this market will be overcome.

Post:

Lagos

Section I: Market Summary

Nigeria is the largest market in sub-Saharan Africa with population of over 158 million growing at 3 percent annually. The economy recorded impressive growth of 7.85 percent in 2010 and 7.72 percent as of the second quarter of 2011 compared to 5.2% forecast for sub-Sahara Africa and food inflation has been on a downward trend from 14.1% in October 2010 to 9.7% in October 2011. Petroleum powers the country‘s economy and petroleum exports account for 20 percent of GDP, 95 percent of total export earnings and close to 85 percent of federal government revenue.

The average Nigerian spends 72.97 percent of his or her earnings on food with little for discretionary spending as detailed below:

Percent of total food expenditures (Nigeria, 2010)

Source: IMAP’s Food & Beverage Industry Global Report -- 2010: Appendix A-iv

With her population, Nigeria provides a large and attractive retail food sector. The major traditional foodstuffs consumed by majority of the population including, corn, sorghum, tubers, and seafood (fish) are predominantly unprocessed and/or semi-processed. However, changing demographics and lifestyles are resulting in increasing consumer preference for wide range of convenience, processed and packaged as well as nutrition foods. These are assisting Nigeria‘s retail food sector to expand.

Nigeria‘s domestic manufacturing recorded average capacity utilization of 53 percent in 2010. Imported manufactured goods continue to far outweigh sales of locally processed consumer-oriented food products mainly due to the high-cost and unreliability of energy supplies (especially electricity), weak infrastructure and inconsistent GON policies. This is creating an opportunity where there is greater reliance on imports.

Analysis of Nigeria’s Retail Food Sector

Nigeria had a history of developed supermarket industry until social and economic changes in early 1980s diminished the country‘s middle class significantly. Since then most Nigerians shop at traditional open-air markets or purchase their goods from traders and street vendors....

Prepared By: Uche M. Nzeka, Agricultural Marketing Specialist

Approved By: Marcela Rondon, Regional Agricultural Attache

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