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HomeNewsManufacturers wail as unsold goods pile up in warehouses

Manufacturers wail as unsold goods pile up in warehouses

Wareehouses

…As cost of living rises, purchasing power drops

By Nkiruka Nnorom

Manufacturers of fast-moving consumer goods, FMCG are in dire agony over the continued rise in unsold goods in their warehouses, a development which would lead to a further significant decline in output level in the sector.
The continued rise in unsold goods is caused by two factors namely the rising cost of living and the declining purchasing power of the citizens.

Financial Vanguard’s findings show that due to the downturn in the consumers’ disposable income, the stock of unsold goods for manufacturers in the fast-moving consumer good, FMCG, sector of the economy rose Year-on-Year (YoY) by 27 per cent during the financial year ended December 31, 2023. The sector operators also indicated that the situation is worsening in 2024 as they expect to report over a 30 per cent rise in unsold goods in the first quarter of the year, Q1’24.

Consequently, they hinted that the output levels have been going down steadily since mid-last year, when the Central Bank of Nigeria (CBN), the report showed that capacity utilisation in the food and beverages sector fell to 49 per cent from 61 per cent in the corresponding period in 2022, indicating a 20 percentage point decline.

Nigerians have been battling with inflationary pressures with its curtailing effect on consumers’ purchasing power in the last eighteen months.

The headline inflation rate has been on a constant increase, rising to 28.82 percent in December 2023 from 21.34 per cent in December 2022, triggered by various factors including high energy cost, and insecurity, especially in the farming communities in Nigeria, among others.

Within the same period also, food inflation surged to 33.93 percent from 23.75 percent a year ago.
The trend has continued unabated in 2024 with headline and food inflation moving further up to 33.69 per cent and 40.53 percent in April from 29.90 percent and 35.41 percent at the beginning of the year respectively.

A combination of the massive increase in inflation coupled with naira devaluation had resulted in price mark up by manufacturers to cover high input costs.

But this cost coverage measure has also alienated many of their consumers, thereby slowing down sales.
Financial Vanguard’s findings from the operations of 15 major FMCGs clearly show a burdensome price index escalating the stock of unsold goods amounting to N104.45 billion despite the huge cut in production quantity.

The companies are BUA Foods Plc, Dangote Sugar Refinery Plc, Nestle Nigeria Plc, Presco Plc, Cadbury Nigeria Plc, Okomu Oil Nigeria Plc, NASCON Allied Industries Plc, May & Baker Nigeria Plc, Fidson Healthcare Plc, and Neimeth Pharmaceuticals Plc.

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