Navigating Nigeria’s FMCG Storm: An Expert’s Perspective on Inflation and Price Sensitivity

Tayo Olukoya

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Fast-Moving Consumer Goods (FMCG) sector in Nigeria, a cornerstone of the nation’s economy, is currently grappling with unprecedented challenges. Persistent inflationary pressures and a sharp increase in consumer price sensitivity are forcing companies to fundamentally rethink their strategies and operations. To shed light on this evolving landscape, we sat down with a seasoned business strategy and operations expert who brings a unique blend of on-the-ground Nigerian market experience and global strategic insights.

With an undergraduate degree in Economics from the University of Lagos, and an MBA from Vanderbilt University’s Owen Graduate School of Management , Nashville Tennessee, Adetula has spent over eight years driving growth at multinational corporations including Procter & Gamble, Reckitt Benckiser, and Mondelēz International.

“The Nigerian FMCG sector is indeed at a fascinating, albeit challenging, point,” Adetula began, emphasizing the shift from traditional volume-driven strategies. “Consumers are now buying less, actively seeking more affordable alternatives, and meticulously scrutinizing every purchase for maximum value. For FMCG companies, the old playbook is no longer effective; the strategic imperative has shifted from simply pushing products to delivering undeniable value.”

The Strategic Pivot: Value Over Volume

This new focus on value is manifesting in critical adjustments to product portfolios. Adetula highlighted the necessity for portfolio rationalization and “right-sizing.” Drawing on experience overseeing distributor operations, Adetula noted, “Companies are critically evaluating their entire product range, prioritizing ‘power brands’ with strong equity and perceived value, while less profitable SKUs might be de-emphasized or divested.” Crucially for the Nigerian context, there’s a significant focus on “right-sizing” pack formats, offering smaller, more affordable units to maintain accessibility for consumers facing reduced purchasing power.
Innovation, too, has taken on a new purpose. “It must now be anchored in affordability and genuine problem-solving,” Adetula explained. This means developing cost-effective formulations, exploring local raw material sourcing to mitigate import-related inflation, and creating multi-functional products that justify their price point through added utility.

In an environment where consumers are quick to switch brands, fostering genuine brand loyalty is paramount. Reflecting on their success in significantly growing revenue at Mondelez, Adetula stated, “This goes beyond mere promotional discounts, which can be costly and unsustainable. It involves building trust through consistent product quality, transparent pricing, and aligning with consumer values like sustainability or community support.”

Data and Digitalization: The New Operational Backbone

The conversation then shifted to the crucial role of data and technology. “Data is no longer optional; it’s absolutely essential,” Adetula asserted. FMCG companies must invest heavily in data analytics to understand granular consumer behavior, identify price elasticity, and tailor promotional strategies effectively. “At Mondelēz, leveraging shopper-insight dashboards was key to delivering strong year-over-year revenue growth,” Adetula noted. The rise of AI-led solutions for revenue growth management is becoming a necessity, allowing companies to fine-tune pricing and promotions at a micro-level.

Operationally, the focus is on efficiency and resilience across the entire value chain. The volatility of input costs and foreign exchange rates has exposed global supply chain vulnerabilities, pushing companies to look inward. “Exploring local sourcing of raw materials and packaging components is crucial to reduce reliance on imports and mitigate currency risks,” Adetula explained, drawing on their experience with distributor operations at Reckitt. This also necessitates significant investments in local manufacturing and robust domestic distribution networks.

Navigating Infrastructural Hurdles and Talent Needs

Nigeria’s well-known power challenges directly impact profitability. “Companies are actively exploring energy-efficient technologies and, where feasible, transitioning to more sustainable and cost-effective energy sources like solar power,” Adetula highlighted, noting this as a crucial area for working-capital optimization.

Finally, the shift towards more sophisticated, data-driven, and technologically advanced operations demands a highly skilled workforce. “Talent development is critical,” Adetula emphasized, recalling their early leadership roles in student organizations focused on professional development. “Investing in training and upskilling employees in areas like data analytics, advanced supply chain management, and digital marketing is not just a good practice; it’s essential for long-term success.”

In conclusion, Adetula’s message for FMCG companies in Nigeria is clear: “The inflationary pressures and consumer price sensitivity are not fleeting phenomena. They represent a fundamental recalibration of the market.” Success hinges on companies that embrace agility, relentlessly prioritize value creation, and strategically leverage technology to optimize every aspect of their business. “This demands a proactive stance – a willingness to disrupt traditional models, invest strategically in resilience, and deeply understand the evolving needs of the Nigerian consumer,” Adetula concluded, adding that their work in engineering commercial turnarounds and optimizing supply chains has consistently shown that resilience and strategic adaptation are the keys to success in this challenging yet opportunity-rich market.