Though 2024 is still at its embryonic stage, the battle lines for the expected CSD cataclysmic war in Nigeria this year were drawn in 2023. Brand Communicator’s Editor, Usukuma Ntia, in his second feature on what to expect in 2024, examines where and how the CSD cookies might crumble this 2024.
It is interesting to note that Nigeria’s carbonated soft drinks (CSD) segment has consistently experienced steady growth, despite diverse economic challenges facing all segments of Nigeria’s economic eco-system.
CHALLENGES OF CSD MARKET
Most Food and beverage companies in Nigeria have been hard hit by the implementation of the N10 per litre sugar tax, foreign exchange scarcity, and high energy prices. Activities of the National Action on Sugar Reduction (NASR), a coalition of health organisations seeking to drive CSDs from the market, are not helping matters in any way.
The subsector contracted by 4.05 percent in the third quarter of 2022, compared to a growth rate of 5.11 percent in the previous quarter.
According to reports by the Manufacturers Association of Nigeria (MAN) Production was strongly hampered in the last few years by a lack of foreign exchange for the importation of raw materials.
Despite these challenges, the 35 million daily and expanding numbers of drinkers as well as the $15.1bn projected revenue for the Carbonated Soft Drinks market in Nigeria are too juicy for brand owners to ignore.
THE OPPORTUNITIES
Even with these challenges, the CSD market is projected to grow annually by 16.70% (CAGR 2024-2027). According to market insight provider, Statistica, there is an anticipated volume growth of 6.5% in 2025, with the volume in the Carbonated Soft Drinks market expected to reach 7.8bn L. in 2027.
Market analysts feel Nigeria’s carbonated soft drink market will continue to experience a surge in demand for some years because of the growing middle class and increasing urbanization.
THE STEADY BUILD-UP
These clear insights must have elicited the Steady Build-Up of Massive Launch Of New Products In The CSD Sector in the second half of last year. It got to a crescendo in the last quarter of 2023 in what looked like setting the stage for a Cataclysmic Implosion in the Carbonated Soft drink market and allied sectors in 2024.
CWAY Food and Beverages Nigeria Company Limited was a top player in this league with one of the new products being the Fizzy Apple Drink. Earlier in the year, a middle-level player, Sidel had launched the Starlite R – a 100% PET bottle, soft drink. Seven-Up Bottling Company (SBC), was another major player, as the company , towards the end of last year, introduced two beverage brands, Hydr8 100 carbonated isotonic drink and D’Vybe flavoured carbonated soft drink into the Nigerian market.
Hydr8 100, a carbonated isotonic drink that contains vitamins and electrolytes comes in three distinct flavours – Strawberry, Pineberry, and Tangy Twist. D’Vybe, with its enticing tagline “Make Every Moment a Vybe,” is a sweetened carbonated soft drink that comes in 2 exciting flavours; Chapman and Ginger. To ensure that they are not missing in action, Nigerian Bottling Company, a member of the Coca-Cola Hellenic Bottling Company, also introduced a new 40cl PET bottle for the Schweppes brand of carbonated soft drink. All three Schweppes variants: Virgin Mojito, Chapman, and Pineapple with malt extract were unveiled with great fanfare in the last quarter of 2023.
THE PET ADVANTAGE
As competition intensifies in the carbonated soft drinks market, all players are pushing to become more efficient and appealing with the use of PET Bottles. That focus must have influenced the packaging of the 3 Schweppes variants.
The beverage market has seen the diverse benefits of moving to PET bottles. These include easier transportation on rough roads, along with improved costs and efficiencies as PET bottles can be blown from preforms on-site to avoid moving fully-blown bottles through the entire supply chain. Manufacturers that have already migrated to PET are now focusing on “light-weighting” like the new SBC Brands.
Consumers are becoming more sophisticated with increased spending power. The result is that the market is demanding improved packaging – lighter, more eye-catching, and more sophisticated packages with better graphics and consumer appeal.
The latest PET packs aredesigned for improved grip, making it easier for consumers, young or elderly, to twist them open. The tamper-evident closure is easy to apply and adds modern convenience to carbonated beverages.
THE FOCUS ON APPLE AND CHAPMAN
Another thing that could be noted in all these new products was the strong focus on Apple and Chapman variants in Nigeria.
Jotna Nigeria Ltd, with her brands – La’Casera and Smoov were the monarchs in these two areas. The two Jotna brands grew these categories, at a time moving them from brands in traffic to more elevated pedestals. Only Bigi tried to dig into these segments to provide some form of challenges
Major players in the CSD sectors must have noticed that either by accident or by design, these two brands have dominated the segment for such a long time, and they are poised to descend on this seemingly spacious market with great fury this year.
The groundwork of 2023 was the precursor to the massive swoop that will happen in the new year. The festive Christmas and New Year seasons were the major ‘routes’, the ‘battle tanks’, and ‘ground troops’ utilized in the campaign. Regrettably, it could end up like the German blitzkrieg of the Second World War. In a matter of months, except if something creative is done, some iconic CSD players might experience what happens to an aging lion in the jungle. With close to 2 billion Naira spent to unveil the new CSD brands in 2023, the battleground is ready and like the gladiators of Ancient Rome, there would be no captives or prisoners taken. It is quite disturbing that Jotna Is not doing much to protect its flanks in this impending war.
It is rather strange that a brand that was very active ‘in the air, on land and sea’ taking my humble self and many other journalists on an exciting boat cruise in the past, has no single activation or media activity in the whole of 2023. It is either there are plans to surrender early (probably negotiations are on for a buy-over) or the management is making a strategic retreat to bounce back in full force as the battle for market share is sure to come. In bouncing back, how and where will forces be assembled before the big wolves emerge? Findings reveal that in the last quarter of last year, all the company’s Heads of Sales in Lagos and Ibadan as well as other members of the sales team have ‘decamped’ to other bottling companies. Jotna and to some extent, Rite Foods with their Bigi brands require urgent and massive reinforcement to avoid a total rout in the coming Tsunami and Impending war in the CSD industry.
OPTIONS FOR SURVIVAL
There are options available for any player in the CSD sector in 2024- consolidate and fight to gain and retain your market share, negotiate to become part of a strong, winning team, or just wait to be swept away by the impending invasion.
The Price war remains an option for brands that desire to struggle for their market space. One of the strategic moves a fringe player can use to challenge big brands with deep pockets is pricing. Although market analysts question the sustainability of a price war against big players, Bigi has used it in the past to create good space in the marketplace. Many sales analysts still view price as a value addition, because consumers get products at a relatively low cost.
MARKET SEGMENTATION
Since consumer tastes and needs are diverse, the need to divide large homogeneous segments and focus on one or a few areas will continue to be essential to the success of all the competitors in the carbonated soft drink market.
The market for Non-Alcoholic Drinks is structured into retail sales for at-home consumption and on-premise or food service sales for out-of-home consumption. The at-home market, also called the off-trade market, covers all retail sales via super- and hypermarkets, convenience stores, or similar sales channels. The out-of-home market also called the on-trade market, the away-from-home market encompasses all sales to hotels, restaurants, catering, cafés, bars, and similar hospitality service establishments. There are regional markets as well as markets within the sub-region
Focusing on one or a few segments can give opportunities for more vibrancy and competitiveness.
REGIONAL MARKETS
For instance, a visit to three carnival centers in Southeast Nigeria at the Christmas Fair, Uyo, Carnival Calabar, and Benin Festival of Cultural Dances revealed the presence of Smoov Chapman and Bigi brands. None of the new brands launched by SBC and Coca-Cola existed in these locations. The focus of these top brands presently should be the Southwest. Instead of dissipating energy where their share of voice would be drowned, these fringe players can focus on ‘up-country’ locations like the Southeast and the North where they can make a great impact.
Although the war in the CSD market this year is sure, answering the question about which brand will comprehensively control the pack in the soft drinks market could be difficult to answer because of several other factors that may emerge. Whatever happens, the position of each player will emerge with time, as the year progresses.