New Food market report from Business Monitor International: "Nigeria Food & Drink Report Q4 2013"

Boston, MA -- (SBWire) -- 11/22/2013 --We continue to maintain our positive long-term outlook on Nigeria's food and drink sector, despite some of the obstacles in the near term. Ongoing instability in the country's northern regions, and high rates of inflation, which increased 8.7% year-on-year in July 2013, according to the National Bureau of Statistics, is having a negative impact on consumer confidence. However, there is no doubt of the tremendous untapped potential of this emerging market, yet a lack of agricultural technology and transport infrastructure are holding back domestic production.

Similarly to much of the continent, Nigeria is experiencing a growing middle class, accompanied by economic growth (real GDP is estimated to have increased by 6.3% in 2012). The increasing spending power of this middle class is being targeted by multinationals who are continuing in invest in the country's food and drink sector. Domestic winners from Nigeria's growing food consumption are more likely to be retailers such as Artee Group's Park'n'Shop rather than food producers as domestic producers are not yet in a position to supply additional demand.

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While economic growth in 2013 will continue to be constrained by the headwinds that characterised much of 2012, including security concerns and the lingering effects of widespread flooding, the long-term outlook remains very bright. We are forecasting average annual real GDP growth of 7.1% over the next 10 years, and expect the Nigerian government to prioritise investment in vital infrastructure over our forecast period and beyond, which will greatly benefit the food and drinks sector, as well as the grocery retail sector.

Headline Industry Forecasts

- Per capita food consumption (local currency) 2013 = +8.51%; five-year compound annual growth rate to 2017 = +8.53%
- Beer volume sales 2013 = +7.69%; five-year compound annual growth rate to 2017 = +8.22%
- Mass grocery retail sales (local currency) 2013 = +31.20%; five-year compound annual growth to 2017 = +36.11%

Key Industry Trends And Developments

Cadbury Fighting Back: Over the past few years, Cadbury Nigeria has been battling accounting scandal that unravelled in 2006 and revealed that the company had overstated its accounts by about NGN13bn (US $80mn). Owned by Mondelez International, the Kraft Foods spinoff and owner of Cadbury, it has a longstanding presence in Nigeria that dates back to the 1960's and a Nigerian stock market listing in 1976. While the scandal was clearly an enormous setback both for the company and indeed corporate governance in Nigeria, Cadbury had built up tremendous brand equity in the years it had been in Nigeria and this has helped it a great deal as it has battled back valiantly.

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