By Alex C
The food, beverage and tobacco sub-sector has once again shown why it remains a key driver of the country’s manufacturing sector as investments in the industry in the second half of 2013 (H2 2013) rose to N49.95 billion, from N32.51 billion posted in the first half of the year (H1 2013). This indicates 53.60 percent increase, according to Manufacturers Association of Nigeria (MAN) data.
The huge investments in the sector validate recent Gross Domestic Product (GDP) series by the National Bureau of Statistics (NBS), which shows that the industry makes half of the now $45.9 billion contribution by manufacturing sector to the country’s $510 billion economy.
The investments are also pointers to enormous opportunities in the industry, and show that the sub-sector will even record stronger growth by end of 2014, say analysts. It reveals that the players are riding on a strong consumer base (170m potential consumers), rising population of young people, increased urbanisation rate, shifts from traditional to packaged foods, changing habits, among others, which the Nigerian economy offers.
“Food, beverage and tobacco producers account for half of the manufacturing sector,’’ said Renaissance Capital (RenCap), in its July report.
Food, beverage and tobacco industry includes players in beer, starch, flavouring, soft drinks and carbonated water, flour and grain milling, as well as tea, coffee and dairy products. The sub-sector also encompasses manufacturers in industries such as fruit juice, tobacco, biscuits and bakery products, sugar, distillery and blending of spirit, among others.
Some major players in the industry are Dangote Group (Sugar, Flour, Noodles, Juice, among others), Flour Mills of Nigeria, Honeywell Flour Mills, Nestlé, Cadbury, Promasidor, the Nigerian Breweries, Guinness, Nigerian Bottling Company, De-United Foods, among others.
The recent NBS series show that growth in the industry accelerated to 12 percent in 2013, as against 7 percent reported in 2012.
RenCap says Nigeria’s large population of upwardly mobile consumers, particularly in the South West, coupled with investments in power, implies the strong growth of manufacturers, including food producers and breweries, is sustainable.
MAN’s data further show production output in the sub-sector rose to N83.72 billion in the second half of 2013 (H2 2013), from N64.4 billion reported in the first half of the year (H1 2013). Capacity utilisation in the sector appreciated to 61.5 percent in H2 2013, from 53.5 percent reported in H1 2013. The sector also recorded an appreciable increase in local content (raw materials sourcing), rising to 79.34 percent in H2 2013, from 68.99 percent reported in H1 2013.
Unplanned inventory was reduced to N389.5 million in H2 2013, from N1.02 billion in H1 2013, while a total of 48,532 staff members were added by the end of 2013.