Why FMCG brands in Nigeria Struggle and How You Can Overcome it.

Created August 31, 2018 The Value of Design in Business

Nigeria is the most populous country in Africa with an estimated 200 million people. This has made it a magnet for multinationals who are eager to cash into the lucrative Fast-Moving Consumer Goods industry in the country.

Fast-Moving Consumer Goods (FMCG) or Consumer Packaged Goods (CPG) are products that are sold quickly and at relatively low cost. Examples include non-durable goods such as packaged foods, beverages, toiletries, over-the-counter drugs and many other consumables.  (Wikipedia)

A Quick look at some giants in the FMCG in Nigeria.

In May 2018, Nigeria’s biggest player in the Fast-Moving Consumer Goods (FMCG), Unilever, announced the sale of its spreads business, Blue Brand, tagging it as the worst-performing unit.

"Blue band is slowing down as consumers are turning away from margarine to other alternatives."

Manufacturers of Fast Moving Consumer Goods (FMCG) in Nigeria have been facing a lot of challenges ranging from multiple foreign exchange rates to high-interest rate even as consumers turn to healthier alternatives and less expensive goods in a competitive market.

I was in a local market a few days ago to buy the once number one detergent (OMO) in Nigeria, but to my surprise, it took me a lot of time to find and purchase it, unlike before when it was readily available everywhere. A quick market survey shows that it is now the least purchased detergent in the market.

The Nigerian market is volatile, as Nigerians are brand loyalists, who are price sensitive and will always go for pocket-friendly alternatives.

Barely a year after the launch of the Always and Pampers plant in Agbara, Ogun state last year, Procter & Gamble Co. (P&G) announced the shutting down of the $300million plant, this is as a result of stiff competition from cheaper brands in the market.

Many opined that the lack of availability of raw materials in the country and the heavy government taxes is what brought about the low market share for this FMCG in Nigeria.

While this is a factor to consider, it is not the major concern. If competitors are finding a way around it and still maintaining their market share, why can't they?

Another popular brand, EVA water, one of the brands under Coca-Cola, is facing a serious threat from Big Cola at the moment.

Big Cola, a soft drink that joined the market a mere two years ago, has been threatening to give Coca-Cola, Pepsi, and others a run for their money.

As these giants face serious threats, new brands are coming out with new strategies and relatively cheaper prices, taking advantage of the older brands’ weaknesses.

The next ‘logical’ step for these giants is to spend a lot on advertising and on promotion

However, this has been proven to work only for the short term, in most cases, because consumers always revert to a cheaper brand once the promotional prices are withdrawn.

So what lessons can we learn from these companies:

Failure to find out the market’s real needs and act accordingly: Some of these brands failed to understand the Nigerian market and so failed to deliver accordingly, P&G for example, wasted hundreds of millions of dollars on a factory that produced a product that was out of place in terms of competitive pricing. In the same vein, insights into the market could have helped other FMCGs improve on their existing brands, thereby increasing customer loyalty. We are firm believers in this.

Market strategies: Not to stress my point made earlier, advertisement and promotion only create a short time awareness and don't necessarily always retain a customer. Why? Because they don’t exactly meet customer needs, long term. Instead of spending money on marketing, (i) investment needs to be made in studying consumer behaviour and then (ii) rigorously testing out solutions that those insights bring to the surface, (iii) when a winning product stands out, as determined by the market, advertising and marketing initiatives can then be carried out to let customers hear about it. 

 

Top FMCG companies in Nigeria.

Nestle Nigeria Plc – one of the oldest in the country, they have people’s trust. Nestle manufactures baby foods, chocolate, coffee, drinks, cereals, dairy, confectionery and more.

Unilever Nigeria – produces well-known products like Knorr, Royco, Lipton, Vaseline, Pears, Blue Band, Omo, and other.

Beloxxi group – manufactures cream crackers and biscuits.

Flour Mills in Nigeria – production of the very popular Golden Penny flours.

Dangote Group – the hugest manufacturing group in Nigeria, producing a wide range from salt, flour and sugar to steel, cement, oil and gas.

PZ Cussons – manufactures different household goods such as soaps, Robb, Venus, Cussons Baby, Zip, Morning Fresh etc.

DUFIL Prima Foods – produces Indomie, Dano milk, etc.

British American Tobacco – the leader in tobacco manufacturing in Nigeria.

Chi Limited – produces refreshing fruit drinks and juices, milk products, snacks, muffins,

Vital products – the company manufactures fruit juices, tomato products, and non-alcoholic beverages .

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    Caleb

    Digital Marketer

    I love to help businesses grow and connect with people.

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