However, those investing in Nigeria should be in it for the long haul and thoroughly do their homework.
A recent presentation by Probal Bhattacharya, marketing director of CHI Limited, one of Nigeria’s largest fruit juice producers, revealed a complex market not for the unprepared.
Bhattacharya told the Juice Africa conference in Cape Town that despite Nigeria’s new status, the middle and upper classes only account for about 5% of the population.
Modern shopping centres are growing but the vast majority of fast moving consumer goods are still sold through informal channels. Commuters stuck in Lagos’s notorious traffic jams can buy almost everything imaginable from traders walking between the cars.
Bhattacharya said young Nigerian consumers are aspirational, want to keep up with the latest trends and are extremely brand conscious. He added that Nigerians are some of the happiest citizens on earth and many have confidence “that tomorrow will be a better day”. Brands need to tap into these aspirations.
Most consumer goods categories are dominated by a small number of companies, and it is very tough for new players to establish themselves in the market.
“Leading brands have cult status. You don’t ask for milk in Nigeria… you have to ask for Peak. You don’t ask for tea in Nigeria, you go and ask for Lipton.”
Consumer preferences vary from one region of the country to the other. Sweet tasting products sell better in some parts, while those with a tangy flavour will do better in other areas. “You have to understand the nuances of the local market in order to be successful,” Bhattacharya said.
Companies also need to be prepared to spend money. “It is one of the highest cost markets… [The] cost of setting up operations [and] running an operation, is extremely high in Nigeria. This is primarily due to connectivity issues and issues pertaining to power.”
Bhattacharya emphasised that Nigeria is not for people expecting short-term profits.