The optimism of the Nigerian consumer on sampling new products

Proshare

Wednesday, December 30, 2015 08:58 AM / FBNQuest Research

The slowdown in GDP growth, the rising pressure on household budgets and the narrative of listed companies would suggest dull prospects for consumer goods companies in Nigeria.

 

We were surprised therefore by the findings of the first edition of Africa’s Prospects, a quarterly report from Nielsen on the 26 sub-Saharan African countries which make up 93% of the regional economy.

 

Released in August, it is drawn on its surveys in Q1 2015 and unpublished series of data from the 18 previous months. The surprise lies in Nigeria’s position as head of the table constructed from macroeconomic, business, consumer and retail factors.

 

The report shows growth at 4.0% y/y annualized in Q1 although the rate has since slowed to 2.8% in Q3. Nigeria’s macro ranking (no 2) also reflects the size of the economy (Africa’s largest by a large margin).

Nigeria enjoys a no 1 position in the consumer category. We have to look no further than the consensus among the 2,500 respondents across the region that Nigerians rank highest in terms of optimism and that their outlook for jobs and personal finances had improved despite the economic slowdown. Nigerians (and Zambians) emerge from the report as the most likely consumers to sample new products.

Its retail ranking in the table is no 5, and is constrained by relatively high food price inflation. Nielsen surveys about 9,500 grocery outlets and kiosks across the region on a quarterly basis.

Nigeria’s lowest ranking is no 6 in the business category. The report notes that Africa has the highest number of business reforms for a region in the World Bank Group’s Doing Business 2015. This achievement does not extend to Nigeria although the new administration, like its predecessor admittedly, has high hopes in this regard.  

Côte d’Ivoire has an overall no 2 ranking from Nielsen and could overtake Nigeria in subsequent editions of the report. We can only speculate since we do not have access to the weightings for the four categories. Earlier this month the distribution group CFAO opened its first shopping mall in Africa in Abidjan, working closely with the French retailer Carrefour.

We cite the Nielsen report because of the company’s large network of respondents and its proven track record in consumer and retail research. It serves a number of firms in the FMCG space. The upbeat message of this new report contrasts with the recent narrative from Nigerian manufacturers. This apparent tension could tell us that the parent companies (and not the local operations) commission the research from Nielsen and/or that the country view looks better beyond the near term.  

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