Despite the economic uncertainty and low consumer spending, international winemakers are seriously studying the Nigerian wine market that is worth an estimated value of 460 billion naira and average growth of 6% per year. The growing marker has seen South Africans, Asians, and Europeans monitor and delve into the Nigeria wine industry.
These brands include Wild Africa Cream, a South African brand, Aviva wine from Spain, Diageo’s Ciroc, a French company, among others, and are eager to enter the market. European and American markets face a change in consumer buying habits, as more and more millennial are cutting back on their wine spending.
Manufacturers have understood this and are turning to the Nigerian market, which has developed a growing preference for imported premium brands, despite quality products from local producers.
Although the Nigerian market remains very price sensitive and demands cheaper products, many hotels, and restaurants located in several exquisite locations in Nigeria sell foreign brand wines.
However, information on the consumption level remains a problem. Most of the wine consumed is sold in traditional markets, grocery stores and supermarkets, and other informal establishments – where sales are rarely recorded.
With a population of over 160 million and rapid economic growth, Nigeria is currently on the radar of several consumer-focused companies. Many multinational breweries worldwide, such as SABMiller, Diageo, and Heineken, have invested in the Nigerian market.
The total volume of wines sold in Nigeria is expected to increase by 6% per year, although the total value only increases by 2%. The market is currently moving around $ 300 million per year and is expected to surpass $ 430 million by the end of the year.
Sixty percent of the wine sold in Nigeria is imported from Europe. South Africa is, however, the second-largest exporter with 22% by volume. South Africa’s wine exports to Nigeria also increased by 12% last year.
A recent forecast from Zion Market Research on the wine market, titled the wine market by Color (Red wine, Rosé, White wine, and others), by product type and distribution channel: shows that the global wine market is worth about $ 302.02 billion in 2017. The market is expected to generate revenues of about $ 423.59 billion by the end of 2023, reaching a CAGR of about 5, 8% between 2017 and 2023.
While the report predicts that the Middle East, Africa, and Latin America will grow slower than other regions, Nigerian consumers are increasingly demanding for premium wines. Greater westernization is seen as a factor of its growth.
According to Euromonitor, importing distributors account for around 70% of distribution, with the remainder being imported directly from retailers and the hotel industry.
Despite growing interest in wine and increased purchasing power, Nigerian consumers remain very concerned about prices.
Before entering the Nigerian wine market, wine exporters should also note the import duty and cumbersome and expensive bureaucracy, including registration with the National Agency for Administration and food and drug control (NAFDAC). It is also worthy to note that exporters should also be aware of political unrest and corruption in Nigeria.
However, Nigerians are also developing a growing taste for wine. Despite Nigeria’s large population, around 61% of Nigerians live on less than a dollar a day.
Several luxury brands around the world have started to target wealthy Nigerians.A good number of these brands estimate that Nigeria may have up to a million clients in the ultra-luxury wine market.
Winemakers should not ignore the potential of the upper segment of the market. Many global luxury brands have entered the Nigerian market and include several well-known spirits and champagne brands, whose products are well received by modern consumers. We know anecdotally from several wine producers that there is a strong appetite for higher quality and more expensive local wines. Despite the long tradition of winemaking in Nigeria, most of the domestic companies are very young. Only a few of them can be proud of having more than ten years of history. We hope for the sake of market growth foreign and local investors buy into the thirsty Nigerian wine market.