Nigeria’s FMCG Sector Shows Resilience Amid Naira Volatility

The fast-moving consumer goods (FMCG) sector in Nigeria is showing indications of recovery following a challenging year characterized by significant currency depreciation and shocks in import costs. As per data collected by BusinessDay, the recent stabilization of the naira has resulted in a considerable reduction in foreign exchange (FX) losses across six FMCG companies. The FX losses for these companies fell dramatically from N420.8 billion in Q1 2024 to N27.3 billion in Q1 2025. This notable reduction is credited to the relative stability of the naira, which has allowed companies to more effectively manage their FX risks. Nestlé Nigeria, Nigerian Breweries, Dangote Sugar, BUA Foods, International Breweries, and Nascon all reported significant decreases in FX-related losses during this timeframe. As FX losses diminish, profitability is either making a comeback or increasing once more. Data compiled by BusinessDay indicated that the after-tax profit of nine of the largest consumer goods firms surged by 311.7% to N248.3 billion in Q1 2025, up from N60.33 billion in the corresponding period of 2024. This recovery signifies a resurgence in pricing power, enhanced cost controls, and improved FX risk management.

Market Stability

According to Uchenna Uzo, a marketing professor at Lagos Business School, numerous consumer goods companies are now in a stronger position to withstand macroeconomic challenges, as market conditions have become comparatively more stable than they were last year. “It’s not that consumers are purchasing significantly more,” he clarified, “but companies have enacted price hikes, which have, in certain instances, resulted in a doubling of profits.” BUA Foods demonstrates significant profit margin growth among its competitors, increasing to 28.32% in Q1 from 15.63% during the same timeframe last year. Nascon’s margin nearly tripled to 18.11%, while International Breweries reported a margin of 16.3%. The nine consumer goods companies surveyed collectively raised their after-tax profits to N248.2 billion, with total revenues amounting to N1.64 trillion during this period.

Backward Integration

Several prominent companies are actively pursuing backward integration strategies to lessen their dependence on imported materials. Nestle Nigeria procures 80% of its maize, sorghum, millet, soya, cassava starch, cocoa powder, and palm olein from over 41,600 local farmers and processors. Dangote Sugar is investing billions in sugarcane plantations throughout northern states to reduce raw sugar imports. In spite of considerable efforts to source materials locally, challenges continue to exist. The naira’s substantial devaluation since the Central Bank of Nigeria allowed the currency to float in 2023 has resulted in heightened costs for imported materials. As of May 2025, the currency was trading at over N1,500/$1, in contrast to N600/$1 in early 2023. The fast-moving consumer goods (FMCG) industry in Nigeria is demonstrating indications of recovery, propelled by enhanced pricing capabilities, stricter cost management, and improved foreign exchange risk strategies. Although obstacles remain, firms that have committed to backward integration and cost-reduction initiatives are more suitably equipped to withstand the macroeconomic challenges. As the industry persists in adjusting to evolving market dynamics, it is anticipated to foster growth and profitability in the forthcoming years.