FOOD NEWS
 DAIRY SECTOR EMERGES 2ND LARGEST IN FOOD&BEVERAGE INDUSTRY IN NIGERIA

The dairy sector has reportedly emerged the second largest segment in the food and beverage industry in Nigeria with estimated revenue of N347 billion in 2013 and an estimated compounded annual growth rate (CAGR) of 8 per cent over the last three years.

A report by Agusto & Co. revealed that the milk segment is the largest in the industry and accounts for an estimated 61 per cent of the industry’s turnover.
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The Nigerian dairy industry consists of six major market segments: Milk, Yoghurt, Cheese, Ice Cream, Butter and Infant Formula.
 

The report showed that the dairy industry has consistently exhibited oligopolistic characteristics with only a few dominant firms.

“FrieslandCampina remains the market leader with an estimated 30 per cent share of the Industry’s revenue; almost double that of its closest competitor.
  Other dominant firms include Promassidor Nigeria Limited, Nestlé Nigeria Plc and PZ Nutricima.
 Operators in the Industry are said to have extensive distribution channels, strong foreign partnerships and enjoy strong product demand”, the report added.

Agusto & Co however noted that the industry is susceptible to the volatility in the price of raw milk powder, adverse movements in exchange rates, poor infrastructure and inconsistencies in government policies.

The report further revealed there is a wide gap between the harvested milk (local supply) in Nigeria and demand, which has resulted in a substantial importation of milk. http://www.thisdaylive.com

 

The report added: In 2013, demand for milk was estimated at 1.7 million tonnes, about 1.2 million tonnes in excess of domestic supply, which was estimated at 591,470 tonnes. Imported milk powder accounts for over 75 per cent of the Industry’s input. The short shelf-life of milk and the absence of the required infrastructure to operate cold supply chain make it difficult to distribute fresh milk in commercial quantities, thus, limiting the development of local dairy farming.

“Contrary to international practice, Nigerian dairy processors either import and repackage milk powders for sale or reconstitute imported milk powders into liquid milk and other forms of dairy products such as yoghurt and ice cream. We expect the Industry to remain dependent on imported milk powder in the medium to long term as domestic milk production capacity continues to remain lower than demand, “it stated.

The report noted that in 2013, the record high price of raw milk powder significantly affected the Industry’s operating costs and consequently profits.” http://www.thisdaylive.com

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