N4.6 Trillion Spent on Food Outside the Home – What Does That Mean?

The Nigeria fast-moving consumer goods (FMCG) of the manufacturing sector is the bride of household expenditure in the last 10 years. Despite earning little, Nigerians spent N22.8 trillion on food expenditure, 56.7% of the total household consumption in 2019. According to the 2019 NBS household consumption data, food consumed outside the home where largely the FMCG sector played constituted 20.19% in the overall food expenditure, gulping N4.6 trillion from citizens.

Despite this alarming figure, the FMCG sector posed as one of the main drivers of the manufacturing sector. The overall sector contributed more than $30 billion – 9.06% to the Gross Domestic Product (GDP), and it is regarded as one of the largest employers of labour in the country. 

According to a World Bank document, the sector plays a critical role in micro, small, and medium-sized enterprises (MSMEs), which constitute more than 96 percent of all businesses in Nigeria. Fast-moving consumer goods (FMCG) are relatively products sold quickly and usually at low prices. They include home, health, and personal care and food & drinks, including its marketing, production, and distribution. Some of the big players in the industry are P&G, Nestle, Dangote, Unilever, PZ Cussons, among others.

N4.6 trillion spent on food outside the home – What does that mean

Going by this data, food items constituted major chunks of consumer’s income. In Nigeria, the consumption of food prepared away from home forms an integral part of the everyday diet of citizens. 

They are mass-market consumables at restaurants, schools, event places, and others. Apart from food consumed outside the home, consumers also spent huge N2.5 trillion on starchy roots, tubers, and plantain. Others are rice, vegetables, fish and seafood, grains and flours, nuts and seeds, meat and fruits, gulping over N1 trillion each from consumers last year. 

All these are some of the components of the Fast Moving Consumers Good (FMCG) industry. Little wonder that the food, beverage, and tobacco subsector of the FMCG sector contributed about 5% of Nigeria’s Gross Domestic Product (GDP) in the last quarter of 2019, according to the NBS Foreign Trade in Goods Statistics.

How the FMCG can tap into this opportunity

Nigeria’s estimated population at 200 million posed a greater opportunity and huge consumer market for the fast-moving consumer goods. Not only the market, the economy, and its strength in the employment of millions.

As food outside the home and other consumable goods are rapidly growing across the developing nations such as Nigeria, producers can tap into the business opportunities by extending factories and operating plants to produce more for the mass market. This invariably will increase sales, open employment opportunities, and reduce poverty. Manufacturers and companies can also introduce a backward integration programme to improve efficiency and reduce cost by gaining more control of the value chain. The expansion can also earn huge forex in the export business as the continent shapes up the operational activities of the African Continental Free Trade Area (AfCFTA). With the surge in online shopping, manufacturers can make sure their new brands and products are listed on various, fighting for a space in the competitive market without compromising quality.

The place of government 

It is important for the Federal Government to provide an enabling environment for consumer goods producers. This will involve catalytic policies and perhaps friendly taxes. Ensuring constant power supply will reduce constraint on the production and as well as high carrying costs weighing on company performance. When there is an enabling environment, companies will produce more, source materials and inputs locally in order to reduce import costs and bypass stress arising from fx margins. Then it will give room for more manufacturers to come in and encourage greater investment in infrastructure.