Nigeria’s fast-moving consumer goods (FMCG) sector is showing signs of recovery after a turbulent year marked by sharp currency depreciation and import cost shocks.
Data gathered by BusinessDay shows that the recent stability of the naira has led to a drop in FX losses across six FMCG companies, falling from N420.8 billion in Q1 2024 to N27.3 billion in Q1 2025.
Nestlé Nigeria, Nigerian Breweries, Dangote Sugar, BUA Foods, International Breweries, and Nascon all reported significant declines in FX-related losses during the period.
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With FX losses narrowing, profitability is either returning or rising again.
Data gathered by BusinessDay revealed that the after-tax profit of nine of the biggest consumer goods firms increased 311.7 percent to N248.3 billion in Q1 2025 from N60.33 billion in the same period of 2024.
The recovery points to renewed pricing power, tighter cost controls, and more effective FX risk management, just months after the sector was rocked by the naira’s steep devaluation and soaring operating costs.
Uchenna Uzo, professor of marketing at Lagos Business School, noted that many consumer goods companies are better positioned to navigate macroeconomic headwinds, as market conditions have become relatively more stable than last year.
“It’s not that consumers are buying significantly more,” he explained, “but firms have implemented price increases, which have, in some cases, led to a doubling of profits.”
“We’re seeing FMCG players return to fundamentals, protecting margins, managing input costs, and regaining market confidence,” said a Lagos-based portfolio manager. “The worst of the FX shock may be behind them.”
BUA Foods leads with margin strength
BUA Foods shows strong profit margin expansion among peers, rising to 28.32 percent in Q1 from 15.63 percent in the same period last year. followed by Nascon’s margin, which nearly tripled the margin to 18.11 percent, and International Breweries with 16.3 percent.
In the first quarter (Q1), the nine consumer goods surveyed collectively grew their after-tax profits to N248.2 billion, with total revenue of N1.64 trillion during the period.
The firms surveyed include: Cadbury Nigeria Plc, Champion Breweries Plc, BUA Foods, International Breweries Plc, Nascon Allied Industries Plc, Nestlé Nigeria Plc, Nigerian Breweries Plc, and Unilever Nigeria Plc.
However, companies like Cadbury, Champions Breweries, International Breweries, Nestle, and Nigerian Breweries all returned to profitability after years of losses, while Dangote Sugar Refinery’s loss fell by 65 percent.
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How local sourcing boosted profitability
Champion Breweries, the only profitable beer maker in Nigeria, was able to pull off consistent growth over the past two years on the back of innovative strategies and operational efficiency, according to Adoga Inalegwu, managing director of the Uyo-based firm.
Inalegwu noted that through innovation and operational efficiency, the company was able to save over half a billion in 2024, a situation that bolstered profit growth and increased its top line.
“Our company is focused on continuous process improvement. And we lean very heavily on the use of total productive management strategies to eliminate risks to cost. And we do so very intentionally,” he said. “And as a result of that, we can generate cash.”
Some notable companies that actively engage in backward integration activities include Nestle Nigeria, which sources 80 percent of its maize, sorghum, millet, soya, cassava starch, cocoa powder, and palm olein from more than 41,600 local farmers and processors scattered across the country and has over 30,000 farmers who supply 100 percent of the grain requirement for Golden Morn Maize.
Similarly, Dangote Sugar is pumping billions into sugarcane plantations across northern states to enable it to cut raw sugar imports.
Guinness Nigeria supported over 30,000 smallholder farmers, who supply it with sorghum, to enable them to move from basic to more efficient and productive yields.
Manufacturers in Nigeria, apart from struggling to secure foreign exchange for the importation of raw materials, are battling high energy costs, which represent almost 40 percent of all their costs, according to the Manufacturers Association of Nigeria (MAN).
FMCG companies remain vulnerable to fluctuations in commodity prices and exchange rate volatility, as many still rely on imported inputs.
A Flour Mills employee, speaking anonymously to BusinessDay, explained that its sugar plantation in Nigeria is insufficient to meet production demand, necessitating imports. “We are also importing wheat because the quality we have in Nigeria cannot match the imported quality,” the employee noted. While Flour Mills grows wheat locally, it still relies on imports due to the lower quality of domestic production.
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Beyond Flour Mills, companies such as BUA, Dangote, PZ Wilmar, Nestlé, FrieslandCampina WAMCO, and Olam Nigeria have also engaged in backward integration. Despite significant efforts to source inputs locally, challenges persist.
Since the Central Bank of Nigeria floated the naira in 2023, it has lost a significant chunk of its value. As of May 2025, the currency traded at over N1,500/$1, compared to N600/$1 in early 2023.
On Monday, the naira closed at N1,544.62/$, up 0.3 percent from Friday’s N1,549.35/$ at the Nigerian Foreign Exchange Market (NFEM), according to CBN data.
