Nigeria’s biscuit sales have sharply declined due to economic challenges including inflation and reduced consumer spending. A 2017 report valued the industry at N121 billion, but current demand may be under 5%. Local producers face increased competition from imported biscuits, leading to factory shutdowns and market changes.
Nigeria’s biscuit industry is experiencing a notable decline in sales, primarily attributed to reduced consumer spending, inflationary pressures, and factory shutdowns. A 2017 KPMG report valued the biscuit industry at N121 billion, projecting an annual output of 152,490 tons with a compound annual growth rate (CAGR) of 16% over five years. However, current estimates suggest that annual biscuit demand has plummeted to less than 5%.
Akin Akintayo, chairman of the Biscuit and Bakery Group of the Manufacturers Association of Nigeria (MAN), highlighted that lower-income consumers—who form the core market—are now limiting their purchases of biscuits in favor of essential items like food, clothing, and shelter. The drop in biscuit consumption can largely be attributed to stagnant household incomes amidst rising prices, forcing families to prioritize spending on necessities.
The KPMG report from 2017 estimated the combined biscuit and bread market size at N243 billion, with the bread segment accounting for 80% at N122.1 billion. While biscuits are dominated by larger companies such as Yale Foods (37%), other competitors like Beloxxi are increasing their market share, coinciding with reported closures of companies like Deli Foods. The bread segment remains fragmented, largely led by artisanal producers.
In response to reduced purchasing power resulting from inflation and low wages (N70,000 or less than $50 monthly), unsold inventories within the manufacturing sector have risen significantly, as noted in MAN’s half-year review report. Manufacturers face tight operating margins in the biscuit industry due to the high price elasticity of demand and competition from cheaper import alternatives.
Recent data indicate a significant increase in biscuit imports from countries like India, China, and the UK. Between March 2023 and February 2024, Nigeria saw a 205% growth in biscuit shipments, suggesting that local production is under pressure from foreign competition. Fola Osibo, a former chairman of MAN, pointed out the numerous challenges facing local producers, including exorbitant raw material costs and unfair competition from inexpensive imported biscuits.
Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), echoed these sentiments, indicating that many local manufacturers are struggling with low production capacity and financial losses, exacerbated by macroeconomic issues, high interest rates, and foreign exchange challenges. The situation led to the shutdown of Mayor Biscuits Company Limited’s manufacturing operations in 2023, indicative of broader industry difficulties.
The Nigerian biscuit industry is currently facing significant challenges due to shrinking consumer wallets, inflation, and increased competition from imports. Local manufacturers are struggling to maintain operations amidst rising costs and reduced demand. The market dynamics indicate a shift that could potentially reshape the landscape of biscuit production in Nigeria, impacting employment and the overall economy.
Original Source: businessday.ng
