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Nigeria: the Largest Economy in Africa

CONTENTS
Retail & restaurants
Alcoholic beverages
Wine consumption
Route-to-market
Our Score
61

The oil-rich Nigeria relies heavily on food and agricultural imports, valued about $10 billion to feed its more than 206 million people. Europe, Asia, USA, South America, and South Africa are the major competitors.

RATE THE NIGERIAN WINE MARKET ATTRACTIVENESS

In 2019, Nigeria’s GDP reached $475 billion, positioning the country as the largest economy in Africa. Oil and gas exports account for about 11% of the national GDP, 95% of its total export earnings, and about 85% of the country’s total revenue.

Nigeria’s large consumer base and growing demand will continue to make the country’s food market sector attractive to investors for a long time. The latter will continue despite challenging macroeconomic factors including ineffective policies, high-cost local production, weak infrastructure, insecurity, the COVID- 19 pandemic etc.

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On November 20, 2020, Nigeria slid into a recession after recording a contraction of 3.62% in the third quarter of 2020. This was the second consecutive quarterly GDP decline since an earlier recession of 2016. The collapse in crude oil prices and the negative impact of COVID-19 lockdown on economic activities early in Q2 plunged the country’s economy into a recession. As a result, inflation rate in Nigeria also jumped to 14.23% in October from 13.71% in September. Food prices increased by more than 30% in the last quarter of year 2020 compared to same period the previous year.

In January 2022, the World Bank points out that the economy is slowly transitioning to full recovery – largely attributed to the full resumption of economic activities after the end of COVID-19 restrictions. Furthermore, the World Banks notes that the economy is projected to strengthen by 2.5% in 2022 and 2.8% in 2023.

Nigeria economy indicators

Nigeria’s population of over 206 million (in 2020) accounts for about 50% of West Africa’s 400 million people. Over half of the country’s population resides in urban areas, and urbanization growing at 4% annually. The country’s population is estimated to reach 400 million by 2050 with about 20% of the population within 15-24 years cohort.

ShopRite, the leading retailer

The Consumption Expenditure Pattern (CEP) published by National Bureau of Statistics measures the nationals spending pattern on both food and non-food items. The CEP shows that an average Nigerian spends about 55% of their income on food while 45% on non-food items.

The retail food sector accounts for about 16.4% of total GDP. About 80% of shopping are still conducted at the traditional shops but more consumers are gradually shifting towards purchasing consumer food at supermarkets and convenience stores.

Since the 2000s, growing middle-class, high oil prices and strong macroeconomic indices supported a rebound of Nigeria’s large scale, high-end regional and mixed-use retail operations. Multinational supermarkets in large shopping mall such as ShopRite from South Africa, SPAR, GAME (a South African retail chain acquired by Walmart), etc. also expanded operations across the country.

RankHost Country Retailers
1.ShopRite
2.SPAR
3.Everyday
4.Ebeano
5.Market Square
6.Game Stores
7.HubMart
8.Next Cash and Carry
9.Genesis
10.Citydia

Nigeria’s retail food sector consists of supermarkets, convenience stores/small groceries, and traditional, open-air markets sharing 2%, 25%, and 73% of total retail food sales, respectively.

Retailers purchase more than 80% of their stock of consumer-oriented foods from importers and wholesalers located in the traditional, open markets.

Online retailing is still at its infancy in Nigeria but, consumers (especially the young population) are increasingly leveraging on the growing internet penetration and increased adoption of smartphones, to move towards online retailing.

Nigeria alcoholic beverages share

35% of wine are consumed in restaurants

According to industry sources, revenues of Nigeria’s food service consisting of full-service hotels, restaurants, quick service restaurants, cafes, and bars, 100% home delivery, etc. reached $13 billion in 2019.

Industry analysis shows that the HRI share in food sales as hotels (30%), restaurants (50%) and institutions/industrial/outdoor (20%).

  • Nigeria Fast Food is expanding and evolving. It’s characterized by both local and international franchising models.
  • Hotel revenues have been harmed by the COVID-19 economic fallout. A large proportion of visitors to Nigeria are largely business travelers working in the oil and gas sector; business travelers representing multi-national companies and consulting firms; travelers representing governments, NGOs and businesses attending seminars and conferences; etc. There is a growing trend for Nigerian families and individuals to stay in hotels during vacations. Hotels in Nigeria are also increasingly offering restaurant and institutional food services .
  • There is a growing trend for hotels and restaurants to establish food service contract divisions to serve industrial, institutional and events customers. The number of institutional food service contractors in Nigeria is uncertain but they do exist as chain catering organizations; welfare catering; hospital catering; school meal service; industrial catering; transport catering; institutional catering; contract catering; outdoor catering.
  • Many upscale restaurants serving continental or ethnic (steak houses, Asian, Tex-Mex, Lebanese, etc.) cuisine, have also been increasingly established over the last past two decades. Some are associated with newly established “boutique” hotels.

Beware of imports through borders

About 50% of the population is Muslim, which does not favor the consumption of alcohol. Note that this part of the population is mainly in the north of the country.

Nigeria remains a largely importing economy despite the government’s development projects in agribusiness. The impact of Covid-19 was felt in a 1.1% decline (by volume) in the import of products in the sector. However, the middle class continues to favor imported products, considered to be of better quality, and the consumption of wine instead of beer and other locally produced products.

The sale of alcoholic beverages has been negatively impacted by containment, as on-trade sales represent the vast majority of volume in Nigeria. Nevertheless, alcohol consumption is becoming increasingly popular, especially among young people and women. Urbanization and the growing middle class also continue to favor alcohol consumption.

Nigeria wine consumption, by volume

There is a preference for entry-level and mid-range products due to the low purchasing power of consumers. Women prefer sweet products and those with a low percentage of alcohol.

Locally produced spirits dominate the sub-sector with bitters being very popular among consumers.
Beers are prohibited from being imported in order to protect local production. International brands, including Heineken 48.7%, Diageo 21.6% and Anheuser Basch InBev 19.6%, are well established.

Beware, there is an import through the borders of a large quantity of spirits. The figures (in volume and value) of these imports and smuggling are not included in the official data. Land borders with neighboring countries, which are major sources of food supply to Nigeria through gray channels, were closed in August 2019 to prevent entry of food and agricultural products were re-opened in the middle of December 2020.

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Sparkling represents 50% of French wine

Red wines are the most consumed with 74% of the volume of wine sold followed by white wines 13%. Red wines are predominantly consumed by the wealthy and upper middle class, who can afford to drink wine during the pandemic.

Nigeria is not a wine producing country, except for palm wine. Spain, South Africa and Italy are the leaders for entry and mid-range wines while France remains popular for high-end products. Other countries present in the market are the United States, Portugal, Chile, Mexico and Australia.

Nigerians are increasingly interested in French wines which have assets in terms of price and quality capable of conquering the market. It should be noted that, like all European products, French products enjoy a prestigious image in Nigeria.
French sparkling wines represent almost 50% of the exported volumes of French wines in Nigeria.

Nigeria wine consumption, by value

The importation and marketing in Nigeria of food products, including locally produced wines and spirits, are subject to prior registration with NAFDAC (National Agency for Food and Drug Administration and Control).
Since October 2005, goods imported into Nigeria are subject to inspection upon arrival in Nigeria. This control is carried out on behalf of the Nigerian government and depending on the geographical area concerned, by three private companies SGS, Swede Control Intertek and Cotecna.

Ekulo is the leading importer

The Nigerian market already has a structured distribution channel. Nigeria’s retail network has undergone a notable evolution since 2009 with the emergence of new shopping malls and the expansion of existing supermarkets in the country’s major consumer hubs such as Lagos, Ibadan, Port Harcourt, Onitsha, Asaba Owerri, Calabar, Enugu, Kano, Kaduna and Abuja.

Clearing procedures are not always followed as written. Exporters usually face huddles requiring unclear flexibilities, bureaucracies and business practices when dealing with officials – resulting in the use of local specialists to handle paperwork and red tape.

The cultural differences in Nigeria must be taken into account. The North is a predominantly Muslim area where alcohol consumption is limited, unlike the South.

Note that it is customary to offer goodies to potential partners, especially after the second meeting. It is also very important to take care of your appearance during the meetings, preferably wearing suits. Be patience with partners is also necessary because meeting times are rarely respected.

Among the major local importers and distributors are Ekulo (42% of the market), Josien and Benik E & Co. Other commercial partners are hotels, restaurants, bars and supermarkets that import directly.

nigeria flag
Nigeria: the Largest Economy in Africa
Our evaluation method
The data shows key metrics, and these are combined to show a ranking calculated using a composite weighted attractiveness combining overall economic factors and wine market factors.
WINE CONSUMPTION IN VOLUME
51
WINE CONSUMPTION IN VALUE
73
IMPORTED WINE IN VOLUME
49
IMPORTED WINE IN VALUE
66
POPULATION
93
GDP PER CAPITA
0
Reader Rating0 Votes
0
61
Wine Market Attractiveness