Milk war: How brands fare in the competitive marketplace
By Tunde Animasaun
The dairy market has always been a hot turf where only the lion-hearted play. Of these players, brands like Nido, Carnation, Blue Boat, and Jago have become spectators while brands like Miksi, Coast, etc have taken the reserve bench in the field of play where the prevailing market reality has forcefully consigned them.
The dynamism of this segment of the Nigerian manufacturing subsector is driven by a healthy competition that has seen brands come up with variants and Stock Keeping Units (SKUs) that cater to the needs and pockets of different and varied customer segments such that no matter who you are, old or young, rich or poor, healthy or convalescing, there is always a milk product for you. Not only that, these brands have ingeniously crafted their products into the Nigerian food timetable such that from breakfast to dinner and the snack between meals, milk has become a recurring decimal in the consumers’ daily meal menu.
This active and highly competitive segment has been driven to a frenetic pitch by recent global and local developments that have negatively impacted the Nigerian economy and consumers’ disposable income. Such global developments as the COVID-19 pandemic, global warming, and recently, the ongoing war in Ukraine have combined with local phenomena like mounting corruption, insecurity, Boko Haram/banditry/Fulani herders-farmers’ clashes, and kidnappings to further worsen the nation’s economic problems.
As the dairy war intensifies in the market, competing brands have been jostling for consumers’ dwindling disposable income. Meanwhile, marketing intelligence revealed some brands like Nido and Jago have opted out of the Nigerian market, while those who stay devise ingenious marketing strategies to retain loyalty and patronage.
The Nigerian dairy market is shared mainly between a quartet of companies. These are FrieslandCampina, makers of Peak, Three Crowns, Coast, and Nunu milk; Promasidor, makers of Cowbell, Loya, and Miksi; Chi Hollandia, makers of Hollandia Evap, and Arla Dano, makers of Dano. Luna milk made by Oriental Food Industries Limited is the latest entrant into the market and a tentative player.
Before assessing competition in the dairy sector, it is not out of place to review the profile and marketing history of the major players in the sector.
Peak milk
Peak milk is clearly the oldest and most versatile brand in the market. It was introduced and has remained in the market since 1954. Having been in Nigeria even before independence, it has grown with the country and has an unsurpassed dominance of the Nigerian market. Over the years, it has grown from a mono-product brand into having the biggest and widest product variants, including evaporated, powdered, flavoured, and ready-to-drink categories.
Peak Evaporated: this includes Full Cream Unsweetened Evaporated Milk, Peak Gold Full Cream Unsweetened Evaporated Milk Tin, Peak Blue Filled Evaporated Milk Tin, Peak Filled Evaporated Milk Tin, Peak Filled Sweetened Condensed Milk, Peak Full Cream Unsweetened Evaporated Milk Sachet and Peak evaporated full cream milk sachet.
Peak powder: the SKUs in this category are; Peak Full Cream Instant Milk Powder Pouch (Refill), Peak filled instant milk powder, Peak full cream instant milk powder (pouch), Peak full cream instant milk powder (tin), and Peak full cream instant milk powder (sachet).
Peak flavoured: here we have; Peak 3in1 chocolate milk powder (pouch) and Peak 3in1 chocolate milk powder (sachet).
In the Peak ready-to-drink category are; Peak UHT milk full cream, Peak UHT milk Low Fat, Peak Yogurt drink plain sweetened, Peak Yogurt drink orange, Peak Yoghurt drink strawberry, Peak Filled Sweetened Condensed Milk Tin and Peak Filled Instant Milk Powder Sachet.
Promasidor Nigeria
The company entered the Nigerian market in 1993 as Wonder Foods with its disruptive cowbell sachet milk. Since then, it has grown its product portfolio into Cowbell Milk (sachet), Cowbell Evaporated Milk, Cowbell Chocolate Flavoured Instant Milk Drink Powder, Cowbell Coffee, and Cowbell Strawberry. Promasidor also produces Miksi Powder milk and Loya full cream milk which are presented in three different SKUs.
Coast Milk
This is one of the milk brands from the Frieslandcampina stable and is presented in powder, evaporated, and UHT categories.
Three Crowns
Also from Friesland Campina, Three Crowns is a milk brand in the Nigerian market. Reputed for its low fat (cholesterol) characteristic, Three Crowns is popular among the elderly and health-conscious people. Its product portfolio includes Three Crowns Evaporated Milk and Instant Milk Powder and both are presented in different SKUs.
Nunu Milk
Nunu is another milk brand from Friesland Campina. It is presented in evaporated and powder format. The evaporated is presented in 160g SKU while the powder form is in three different SKUs.
Dano Milk
Arla Dano is the maker of the Dano Milk brand in Nigeria. Its portfolio is made up of a range of powder milk products. These are Dano Cool Cow, Dano Full Cream Milk Powder, and Dano Skimmed Milk Powder.
Hollandia Milk from the stable of Chihollandia is another milk brand with a presence in the Nigerian market. It is the direct opposite of Dano as far as product presentation is concerned because while Dano’s products are Powder milk only, Hollandia’s are evaporated milk only which are presented as Hollandia Evap and Hollandia Slim Evap milk and both come in three different SKUs.
Other milk products from the Hollandia stable are Lactose-Free Milk and the UHT Milk range (UHT Milk– Full Cream, UHT Milk – Low Fat).
Hollandia Yoghurt is perhaps the most popular product and the flagship of the company in the dairy market. It comes in several variants and is presented in different SKUs.
Luna Milk
There are two major products on the portfolio of Luna milk, the brand from the stable of Oriental food industries. These are Luna Popular Instant Milk which comes in three SKUs and Luna Filled Creamer Milk which is available in 160g tin.
Our focus in this report however is on evaporated and powder milk products.
In the course of the research, our reporters visited Shoprite, Alausa, Ikeja, Justrite, Ishaga, Lagos shopping malls, Ojuwoye Market, Mushin, and Agege Market and spoke with several street retailers.
At the time of our visit to Shoprite, the local milk brands on display were; Peak (evaporated and powder in their different SKUs except for sachet), Cowell (evaporated only), Dano (in their different SKUs except for sachet), Loya, and Hollandia (Evap and Slim).
According to the purchase indicator (PI) Label on the shelves and our interaction with the sales girl on the floor of the mall, the fastest moving milk (evaporated) was Hollandia closely followed by Peak and cowbell which was a distant third. Explaining the gap between Peak sales and Cowbell, the sales girl said: ‘People do not usually go for Cowbell as the first choice. It is when Peak and Hollandia are low in stock that they turn to Cowbell’, she said. The fastest-selling brand for powder milk on the other hand was Peak closely followed by Dano. The sales girl said that Peak powder (especially the 800g pack) is their ‘cash cow’ as it moves more than any milk brand on the shelf. Asked which brand would be third for the category, she said it would have been Loya but for the fact that it had been out of stock for quite some time and just returned last month.
The findings at Justrite, Ishaga Outlet are a bit different from Shoprite. While peak led in both evaporated and powder milk categories, Three Crown was next followed by Hollandia in the evaporated category. Perhaps, what accounted for the disparity was that Three Crowns was out of stock at the time of our visit to Shoprite. In the powder category, Dano was the second best-selling brand with Loya being a distant third. Similar to Shoprite, Dano was closely behind Peak while there was a wide gap between Dano and Loya which was next. Another observation was that the sachets SKUs were prominent in Justrite and moved more than the refill or tin packs.
On the open market, the team visited Ojuwoye Market, Mushin, and Agege Market. At Ojuwoye, the store of Mama Seyi, a wholesaler, was our first point of call. According to her, the fastest moving brands are as follows:
Evaporated: Peak, Hollandia, and Three crowns
Powder (Refill): Dano, Peak, and Loya (cream)
Peak, Dano (filled)
Powder (sachet): Peak, Dano with Cowbell coming a distant third.
Asked why her stocks of some brands are very low, she responded: “I stock what is moving in the market. I am a trader, not a warehouse. It does not make business sense for me to keep stock for long in the store because sometimes, we sell a carton with just N100 profit. The more we sell, the better for us.” She also explained that milk is easily spoiled and open to rodent attacks. So, it is not economically wise to hold stock for long.
At Chinedu Stores, the store owner, Chinedu Okeke, gave the following information regarding the movement of milk brands at the store.
Evaporated: Hollandia, Peak, Three Crowns
Refill: Dano, Peak, Three Crowns, and Loya
Sachet: Dano, Peak, Three Crowns
In Endee Stores, the shop owner related that the sales trend in his shop was as follows:
Evaporated: Three Crowns, Peak, Hollandia
Powder (Refill): Peak, Dano
(Sachet): Peak, Dano
At Agege market, God is Able Stores, Ajoke Stores, and Delight stores were interviewed to see how the milk brands fared in their stores. God is Able Stores said that the fastest moving evaporated milk brand was Peak followed by Three crowns and cowbell while Dano is the first for powder milk followed by Peak and Three Crowns. For Ajoke Stores, she said the fastest moving evaporated milk was Hollandia Milk (65g) followed by Three Crowns and peak while in the powder milk category, Dano takes the lead closely followed by Peak. For Delight Stores, the fastest moving evaporated milk was Peak followed by Three Crowns and Hollandia while in the powder form, the fastest moving was Dano followed by Peak.
The team also entered some streets to sound out street retailers on the performance of the brands in their areas.
Anselm Osinachi in the Akute area said that Hollandia, Three Crowns, and Peak are the evaporated milk brands that move in that area while Dano, Peak, and Three Crowns are the selling brands for powder milk. Mama Bariga in the same area said she sells more Hollandia than any other evaporated brands with Three Crown and Peak following. In the powder milk category, she said Dano, Three Crowns; Peak, and Loya are the brands that are moving.
At Balogun, Ikeja, Mallam Mukhtar, a provision seller, said that he sells more Dano and Cowbell than any other brands. According to him, most people prefer Dano and Cowbells because they are creamy and pocket-friendly. He said that the people that ask for Peak are the rich ones.
Another seller, Mrs. Mulikat Anifowoshe said Hollandia, Peak, and Three Crowns are the evaporated brands that sell well in her shop. She said the Hollandia triangle pack is popular because it is preferred by those taking a one-serve meal while those making a meal for the family or many people are likely to go for peak or Three crowns. For Powder milk, she said Dano, Peak, Three Crown, and Loya are the brands that attract patronage.
Analysis
The above report from the market has shown that competition in the milk segment is getting hot and hotter by the day. The disruptive sachetisation by Cowbell which came as a rude jolt to Friesland Campina, the clear and hitherto unchallenged leader in the milk segment has been taken a notch higher by Hollandia and Dano. The introduction of tetra packs in three SKUs in the evaporated category by Hollandia combined with Dano’s onslaught in the powder milk category with sachetisation, quality, and lower prices has seen the brands making serious incursions into the market.
Be that as it may, the dominance of Peak is still evident. To guard its coast and ensure the mitigation of market loss as a result of the disruptive marketing of its competitors, FrieslandCampina, makers of Peak introduced more brands and acquired existing ones. Hence, Three Crowns, and Coast Milk were introduced while Nunu and Olympic were acquired from Nutricima.
Undoubtedly, Friesland Campina has the resources to sustain the ‘territorial hedging’ strategy to hold on to market leadership. Eventually, however, something will give. Whether it is FrieslandCampina’s hedging capacity or the competition’s disruptiveness, time, they say, will tell.
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