Irish Dairy Milk Company International set to disrupt Nigeria’s Diary market

The competitive dairy market in Nigeria is set to witness a more fierce competition as a new global player, Irish Dairy Milk, has indicated intention to launch its premium milk brand into the Nigerian market soon.

Specifically, the multinational milk brand has concluded plans to open its factory in Ogun State with a view to taking maximum potentials of the market which is closer to Lagos state, the commercial capital of Nigeria with seaports.

Dropping the hints recently during a courtesy call on the State Governor, His Excellency Mr. Dapo Abiodun, Chief Executive Officer, Irish Dairy Milk, Samir Boudjada, noted that the company’s choice of Ogun State was because of its strategic relevance and proximity to Lagos State.

“This is the gateway state close to Lagos and you know when you are sighting a factory, you need certain parameters. We need a seaport that we can send out our goods. So, Ogun State is strategically relevant to the business of these nature and we didn’t make a mistake, Ogun State has passed all tests,” he said.

The proposed investment from the Irish company underlines the prospect of the dairy industry in Nigeria for growth. Currently, Nigeria’s output of milk per cow per day is about 1 litre, compared to other African countries like Kenya and Uganda with between 30 to 40 litres of milk per cow per day. Compared to Africa and Asia’s average of 0.9 million tonnes and 6.6 million tonnes, respectively, Nigeria’s 0.6 million tonnes of milk production is the lowest in the world, according to PricewaterhouseCoopers (PwC) Nigeria.

The multi-national professional services firm in its latest analysis titled: “Transforming Nigeria’s Agricultural Value Chain: A Case Study of the Cocoa and Dairy Industries”, said Nigeria consumes an estimated 1.7 million tonnes of milk annually, but her production output only meets about 34 per cent of demand.

The report, which was authored by PwC’s team of seven experts, added that Nigeria’s annual production deficit of over 1 million tonnes of milk is being met by importation, which costs an average of $480.3 million, about N173.3 billion, annually.

In a bid to bridge the supply gap and also tap in on the growth opportunity it offers, the major dairy brands in Nigeria have been entangled in a fierce investment drive to increase production output and market share growth. Over the last couple of years, there have been rise in investment in the sector directed at advertising/ sales promotion as well as boosting production capacity to meet local demands.

FrieslandCampina WAMCO has been at the driver seat of the initiative. Last year, the Dutch multinational dairy cooperative, announced a fresh injection of 23 million Euros into its operations in Nigeria as part of its sustainable Dairy Development Programme.

The dairy company which produces Peak Milk and Three Crowns Milk has been at the epicentre of Nigeria’s dairy market revolution. Upon the announcement of this investment, the company is consolidating on its previous efforts to address the deficit in milk production in Nigeria.

“We are investing around €23 million in our evaporated milk and ready-to-drink milk factory in order to provide fresh milk for the Nigerian consumer. FrieslandCampina WAMCO has been successful with dairy development in recent years and milk yield is improving,” said global CEO, Hein Schumacher.

Besides boosting production capacity, FrieslandCampina WAMCO has also been deploying various sales/marketing initiatives to drive milk consumption and market share growth. Initiatives like Pekadomo, Three Crowns Mother of The Year campaigns have successfully introduce the brand to new segment of the consumers.

Another competition that is actively striving to close the supply gap is Arla Foods, which few years ago commissioned an ultramodern production plan in Lagos as part of an African expansion strategy. As at 2015, Arla recorded sales in the sub-Saharan African market was €90 million, with €80 million coming from Nigerian market alone, but its targeting sales of €460 million by 2020 through the concentrated increase in sales of liquid milk, its Dano brand powdered milk, and in the future, the sale of cheese and butter.

“Nigeria is one of the biggest markets for dairy products in Africa,” said Hadsbjerg. “For Arla to succeed in Africa we must succeed in Nigeria. The population is growing at a rate of two to three percent per year, and people are young, ambitious, and increasingly well educated. This makes Nigeria a perfect market for Arla’s Africa strategy.”

In order to achieve its target, Arla signed joint venture agreement with Tolaram. Leveraging on Tolaram’s strong distribution network, Arla expects its Nigerian revenue to increase to €240 million by 2020, and following the establishment of its venture with Attieh, the cooperative expects its revenues in Senegal to increase to €32 million over the same time period.

Similarly, Promasidor, makers of Cowbell and Loya Milk has in recent times also focused on enhancing productivity. In 2016, the multinational company said it planned to inject a $25 million loan (over N8 billion) into its production with a view to increasing efficiency and to produce more products for the benefit of Nigerian populace.

Olivier Thiry, Managing Director, Promasidor Nigeria Limited- PNL, explained that the capital injection would be used to support purchases of new machinery that will enable PNL to increase efficiency, expand production and develop new products, leading to greater availability of nutritious food products in Nigeria at competitive prices.

“This is a very competitive market for food products. We expect that this investment will help us optimise production costs, enabling us to reach and nourish more consumers with our affordable range of quality products. We will also target our portfolio extension by gradual integration of more locally sourced raw materials from producers in Nigeria and widening our network of distributors,” he explained.

But with the entry of Irish Dairy Milk Company International, another major player in the global market, analysts have said the dairy segment could become even more exciting, as the Irish company is expected to deploy strategies that could unsettle the existing players and force them into compromises that could benefit Nigerian consumers.


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