Nigeria's Food and Drink Industry Continues to Attract Investment from Foreign Operators...

Tue Mar 25, 2008 5:00am EDT

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

DUBLIN, Ireland--(Business Wire)--
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 Nestle's decision to expand its production in the country.
According to reports in the local press, Nestle 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 Nestle 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.

Nestle has been present in Nigeria's food processing industry
since 1961, with the Agbara factory operational since 1981. Nestle
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 Nigeria
Nigeria Breweries (NB)
Cadbury Nigeria
Park 'n' Shop

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

Source: Business Monitor International

Research and Markets
Laura Wood
Senior Manager
Fax: +353 1 4100 980
press@researchandmarkets.com