Friday, September 21, 2018

Challenges of the premium bread brand in Nigeria

Challenges of the premium bread brand in Nigeria
September 07
06:29 2018
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BY JEREMIAH AGADA

As many sectors and industries within the Nigerian economy are slowly picking up pace after a turbulent era of recession, the bread sector, specifically the premium bread subsector has remained comatose. This baffling reality has continued to baffled economists and stakeholders who feel the reverse should have been the case considering that the bread industry is very active in climes like this.

This is because the market for bread in Nigeria is national. With a population of over 180 million people and an estimated national population growth rate of 5.7% per annum, an average economic growth rate of 3.5% per annum in the past five (5) years, Nigeria has a large market for bread. With governments drive for diversification, this industry is one key driver. A KPMG report released two years ago placed the rate of its growth at 72 percent and its worth at a whopping $621 million market value which is expected to keep growing pari passu the population.

For Nigerians, bread is a staple food. In fact, it is more staple than rice, eba or any of the popular staples perceived as an exclusive preserve of Nigerians culinary culture. All genders, all ages, all tribes, both the rich and the poor consume bread, and it comes in various sizes, shapes, compositions and price tags to meet the needs of different categories of consumers. It is a grab and go staple that goes with almost anything, that is why there is virtually no household in Nigeria where bread is not consumed.

The importance of this staple to a country like Nigeria can therefore not be overemphasized. For instance, at the heart of the French revolution in the 17th century, scarcity of two of the most essential elements of French cuisine, bread and salt, were at the heart of the conflict; bread, in particular, was tied up with the national identity. Bread was considered a public service necessary to keep the people from rioting and bakers, therefore, were public servants. According to Sylvia Neely’s ‘A Concise History of the French Revolution,’ the average 18th-century worker spent half his daily wage on bread. But when the grain crops failed two years in a row, in 1788 and 1789, the price of bread shot up to 88 percent of his wages. Many blamed the ruling class for this among other factors, and that culminated to the French Revolution.

Apart from producing one of Nigerias staple foods, the bread industry creates jobs-those directly employed by the industry, armies of bread distributors, sellers and hawkers all over the streets. It has thus, reduced national unemployment in the country by a wide margin. Information gathered from the Premium Breadmakers Association of Nigeria (PBAN) alone has it that over 700 thousand people are gainfully employed in the premium bread sub-sector of the industry both directly and indirectly.

Notwithstanding the above, several factors have over the years, been plaguing the profitability, viability and survival of the industry. Should nothing urgent be done about this and the status quo remains for longer, a bread revolution may be upon us soon. Premium bakeries are going under every day due to the unbearable cost of production.

One of the biggest challenges facing the bread industry is government policies regulating importation of materials needed for the production of bread. For one, there is a dissonance tune between government policies for the industry and the realities that major stakeholders that comprise bakers, face. For instance, the government charges 15 percent extra duty for wheat importation into Nigeria!

Government through the minister of agriculture, Audu Ogbe had claimed that the 15% extra duty is for the development of the local industry- for researching cassava production of cassava bread as well as growing for wheat. The idea is noble but one cannot see the sincerity in it as years down the line, government has nothing to show for a research it did not fail to collect duty on! Government should take another look at the 15% extra duty on wheat and see how to bring it down considerably to assist in driving down the price of wheat which is the major ingredient in flour production.

In the last five years also, the price of raw materials for making bread has been on the steady increase with flour increasing by over 150 percent. Sellers of these raw materials can afford to hike their prices in demands to market forces but the premium baker is not as dynamic.

Yet another major challenge of the industry is the glut, saturation of that space with too many players. For outsiders without much insight into the industry, the business of bread making is looking very lucrative. This explains the many bakeries-both certified by NAFDAC and non-certified by NAFDAC-in all nooks and crannies of the country.

Closely related to this, is the activities of unregistered, unlicensed and undocumented producers of bread, who are not under any obligation to adhere to NAFDAC health and other safety standards. They pose a risk not just to regulated bakers but to the last consumer, as well. They produce cheap, but poor quality bread with unwholesome baking material like potassium bromate which is injurious to health and cancerous, nonetheless, attract high patronage because of their low prices.
A body like the Premium Breadmakers Association of Nigeria (PBAN) recognises the efforts NAFDAC is making to stop the use of unwholesome baking materials for bread production, especially the use of potassium bromate that is cancerous.

According to Tosan Jemide, PBAN President, NAFDAC is seriously under-staffed as a regulator of food and drugs in Nigeria. “We wonder how with a staff of about 2,300, NAFDAC is expected to police bakeries that use unwholesome baking materials who are churning out killer products to the market in a vast and to be adequately staffed to enable them fulfil their regulatory functions.
The regulated and licensed bakers in PBAN, who have to bear the extra cost of meeting NAFDAC requirements, often find it difficult to compete with these unlicensed and unregulated producers on price. This is evidenced by the numbers of premium bakeries that are folding up daily. Some of the registered producers have been compelled to cut corners-such as defaulting on some of NAFDAC;s requirements-just to survive,” he said.

The few challenges highlighted above call for immediate action from all stakeholders-government, bakers, etc. The need to come to the roundtable and iron things out is important. There should be a deliberate effort by the government to grow the premium bredkmaking industry. The Premium Breadmakers Association of Nigeria (PBAN) will look at finding a way to engage government in finding lasting solutions needed to salvage the breadmaking industry in Nigeria.

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