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Nigeria's Food and Drink Industry Continues to Attract Investment From Foreign Operators Despite It's Difficult Operating Environment

Posted on: Tuesday, 25 March 2008, 06:00 CDT

Research and Markets (http://www.researchandmarkets.com/reports/c86496) has announced the addition of Nigeria Food and Drink Report Q1 2008 to their offering.

The Nigeria Food and Drink Report provides independent forecasts and competitive intelligence on Nigeria's food and drink industry.

Despite a difficult operating environment and persistent issues of corruption, Nigeria's food and drink industry continues to attract investment from foreign operators, thanks to the industry's vast untapped potential, as discussed in BMI's recently published Nigeria Food & Drink Report for Q108. An example of this is Swiss food and drink giant Nestlé's decision to expand its production in the country. According to reports in the local press, Nestlé is receiving support from the Ogun State government to expand production at its Agbara plant, located in the south-west, near the main city Lagos. According to Nestlé press reports, it is expected that this investment will further stimulate sustainable growth, increase the company's market share and broaden the nutrition, health and wellness business platform for the company in Nigeria. Any such investments, and particularly those made by large multinationals, are welcome news in Nigeria, given the country's reputation as a risky place to do business. Nigeria is known to suffer from widespread corruption, lack of transparency, political instability and the arbitrary enforcement of trade and investment regulations which have in the past limited its growth potential and deterred foreign investors.

Nestlé has been present in Nigeria's food processing industry since 1961, with the Agbara factory operational since 1981. Nestlé produces baby food, confectionery and bottled water, and is a leader in the coffee and cocoa markets. One of the reasons behind the company's decision to expand its local production is surely the fact that cocoa is a major crop in Nigeria and it is the world's fourth-largest producer. Cocoa was Nigeria's main export product in the 1960s, but with the discovery of oil, the government began to neglect the sector, causing production to fall. Following the oil boom, which started in the early 1970s, the economy experienced a major expansion. Yet despite being Africa's largest oil producer and benefiting from high global prices, more than half of the population still live in poverty, with economic progress undermined by deep-seated corruption and mismanagement. A few years ago the government decided to refocus its efforts on cocoa production, with an ambitious project, the aim of which was to triple cocoa production. Yet despite the major investments made, the project was not entirely successful, often because of widespread graft. Although most traders and farmers estimate the country's cocoa production to be around 242,000 metric tonnes annually, as mentioned above, the government claims that production is around 400,000 tonnes annually.

In October traders and exporters in Nigeria's cocoa market were complaining of a shortage of supply, due to a low annual harvest. The low production was attributed to a number of factors, including poor weather conditions, aging cocoa trees and a failure of replanted cocoa to quickly produce new yields. However, in December the Cocoa Association of Nigeria reported that the outlook for Nigeria's cocoa crop this year appears to be more positive than originally anticipated, amending the expected harvest for the 2007-08 season. Although the food and drink and agricultural industry will surely continue to face certain obstacles, these above-mentioned developments are positive signs for Nigeria's food and drink industry.

Companies Mentioned:

Guinness NigeriaNigeria Breweries (NB)Cadbury NigeriaPark 'n' Shop

For more information visit http://www.researchandmarkets.com/reports/c86496

Source: Business Monitor International

Source: Business Wire

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