High cost of living: Transaction on Nigerian FMCG market falls 17.4%
Agency Report
The Nigerian Fast-Moving Consumer Goods (FMCG) market has seen a sharp 17.4 per cent decline in transaction volume this year, as Nigerians struggle with soaring costs, according to a report by NielsenIQ.
The report, assessing market performance and consumer behaviour up to March 2024, revealed a worsening trend from the 4 per cent drop in 2023.
NielsenIQ pointed to the declining purchasing power of consumers amid rising inflation, which hit 34.2 per cent in June 2024.
Despite this, the FMCG market’s value paradoxically grew, with a 21.6 per cent increase in 2023 and 24.8 per cent in 2024, as consumers spent more on essential goods while cutting back on non-essentials.
The report also highlighted the impact of the cost-of-living crisis on Nigerian consumers, with 81 per cent of respondents feeling worse off than the previous year.
The study challenged the conventional wisdom on innovation success rates, revealing that 52 per cent of innovations led to sales growth in their second year, underscoring the importance of innovation in the FMCG industry.
This indicates that while consumers are buying less, they are spending more on essential goods, driving up the overall value of the market. “This suggests that essential goods remain a priority for consumers, even as they cut back on non-essential purchases,” said Joyce Nwachukwu, Associate Director of West Africa at NielsenIQ.
The analysis of various FMCG sectors—including home care, personal care, confectionery & snacks, non-alcoholic beverages, and food—found that manufacturers focused on innovation were 1.8 times more likely to experience overall sales growth despite the challenging economic environment.
The study challenged conventional wisdom on innovation success rates, revealing that 52 per cent of innovations led to sales growth in their second year, contrary to the widely held belief that only 5 per cent to 15 percent of innovations succeed.
“Prioritizing innovation and investing in research and development can unlock significant growth opportunities for businesses, even in tough economic times,” said Bayonle Oseni, Head of Innovation Insights (BASES), East & West Africa at NielsenIQ.
Faith Wanderi, Managing Director of NielsenIQ (East and West Africa), emphasized the importance of understanding shifting consumer behavior to make informed decisions on pricing, brand strategy, and distribution.
She noted that consumers are increasingly switching brands, driven by the economic crisis, but manufacturers can connect with them through innovative strategies such as offering different product sizes.
The report comes as Nigeria faces its most severe cost-of-living crisis in a generation, with inflation reaching 34.19 per cent—the highest in 28 years—and food inflation surpassing 40 per cent as of June 2024.
The inflation spike was triggered by the removal of the petrol subsidy in May 2023 and the over 100 per cent devaluation of the naira since June 2023 by the Central Bank of Nigeria.
