October 21, 2025/CSL Research
The Fast-Moving Consumer Goods (FMCG) sector, which faced a turbulent period in recent years, has witnessed a notable recovery in 2025. The industry has been severely impacted in the past two years by a combination of global shocks and domestic economic challenges. However, the improvement in key macroeconomic indicators this year has supported stronger financial performance among listed companies, a trend expected to continue in the near to medium term.
On the global front, persistent geopolitical tensions and tariff impositions have led to elevated and volatile prices across major commodities, though the impact has varied by product. Cocoa and coffee have seen the sharpest price increases, driven by weather-related supply shortages, higher input and shipping costs, and trade disruptions in key producing regions. Palm oil prices have also remained high, supported by strong global demand and supply constraints linked to export restrictions and rising energy costs. In contrast, raw sugar prices have been relatively stable, as robust output in India and Brazil helped offset the effects of higher logistics and energy expenses.
Domestically, the improving macroeconomic environment in 2025 has underpinned the sector’s rebound. The challenges of the last two years, marked by record-high inflation, weak consumer spending, and sharp currency depreciation have eased considerably. Many firms have reported higher sales volumes, supported by modest gains in consumer purchasing power and sustained marketing and promotional efforts. The impact of the Naira depreciation on production and financing costs has also moderated, aided by reduced foreign exchange (FX) volatility. That said, FX-related risks remain a concern, particularly for companies with foreign-currency-denominated debt or heavy reliance on imported machinery, spare parts, and raw materials.
Nonetheless, most FMCG firms are expected to post pre-tax profits in FY2025, marking a strong turnaround from the losses recorded in 2024. The Food, Beverage, and Tobacco (FBT) sub-sector is projected to grow by 2.7% year-on-year in 2025, slightly up from 2.5% in 2024, when GDP growth had fallen sharply from 6.5% in 2023. This modest rebound signal gradual stabilization and a return to positive momentum within the sector.
The consumer goods industry has remained dynamic in 2025, leveraging innovative route-to-market strategies and strengthening supply chain resilience. Increased participation in e-commerce and partnerships with emerging retail chains are enhancing market penetration and reducing distribution costs, aligning with the growing digital shopping habits of lower- and middle-income consumers.
Furthermore, companies have navigated challenges such as elevated debt levels and negative shareholder equity positions, largely due to FX revaluation losses, by employing measures including debt-to-equity conversions, debt waivers, and asset revaluations. With improving macroeconomic and market conditions, more firms are likely to pursue rights issues to strengthen their balance sheets and raise additional capital.
Overall, FMCG sales volumes are expected to remain elevated, supported by a modest recovery in consumer spending. Gradual improvements in sales, combined with strategic price adjustments across product lines, are driving top-line growth, while reduced FX losses and exchange rate stability are bolstering bottom-line profitability. Together, these factors set the stage for a strong full-year performance in 2025, as the stock prices of major FMCG companies continue to record year-to-date gains. We presently have BUY recommendations on Nestle Nigeria Plc (Nestle), Cadbury Nigeria Plc (Cadbury), and UAC Nigeria Plc (UACN) underpinned by sound fundamentals, strong growth recovery, and strategic market positioning. Our target prices for these are ₦2,427.79/share, ₦83.03/share, and ₦103.44/share respectively.
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CSL Research FMCG Sector Report 2025 – Sector In Rebound.pdf
