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Wheat millers jostle for market shares as competition intensifies

By Princewill Ekwujuru & Yusuf kazeem

THE battle for market share in the wheat meal market has narrowed top contenders for number one position to three brands: These are Honeywell wheat, manufactured by Honeywell Flour Mills Plc, Golden penny wheat, produced by Golden Penny Nigeria Plc and Crown wheat, manufactured by Crown Flour Mill, a subsidiary of Olam.

Wheat

The three brands have employed different direct marketing, marketing development and market penetration strategies. Also the industry leaders noted that with increased urban population, the market size had increased in recent years leading to high demand for the product.

The rising demand for the products is said to be majorly caused by increasing number of persons diagnosed with diabetes and number of adult indulgers in wheat consumption. As a result of these factors, Honeywell wheat, Golden penny wheat  and Crown wheat brands have not only deployed the direct marketing tactics and market penetration strategies to reach their target market, they have also offered additional incentives like price discount, products gift and trucks to distributors who have met the target set for them, and other gifts to attract and retain prospective and existing customers.

The three brands now take the products to their distributors’ shops, thereby saving the distributors the hassle of going to the companies to order for the products.

Market penetration strategy

Vanguard Companies and Markets, C&M, findings show that the market penetration strategy by the manufacturers has been of benefit to the three brands. The strategy has helped them reach their primary market and improve their sales margin. The segment is expected to witness strong growth driven by the growing middle class and the expansion of mass grocery retail channels in the urban areas, according to  C&M  findings.

Based on this, wheat meal manufacturers are also doing everything within their ambit to thwart penetration of foreign products into the Nigerian market. The local manufacturers control 70 percent of the market.

There are close to six different wheat brands in the market. These are Honeywell wheat from the stable of Honeywell Flour Mills Plc, Golden penny wheat produced by Golden    Penny Plc; Crown wheat, manufactured by Crown Flour Mill; a subsidiary of  Olam; and   Eagle wheat, produced by Eagle Flour Mill, Oyo State. Others are Gombe Dadaka International Flour Mill, Gombe and Valloumbra Flour Mills Limited of Enugu State. One of the foreign wheat brands is kavukcu wheat, imported from Turkey.

Consumers who responded to C&M, findings identified three brands which has emerged top of the mind brand in the market, with majority of the consumers signifying their preference for  Golden penny wheat, Honeywell wheat and Crown wheat, leaving other local and imported brand to scramble for the remaining percent of the market.

Consumers’ reaction

Price changes in the wheat market is insignificant; with the prices being almost the same, but for a slight difference as a result of the weight. A wholesaler, Madam Chiwendu, at Ikotun market, Lagos, said 1kg of Golden penny, Honeywell and Crown wheat sell for between N2,600, N2650 and N2670, while the 2kg size sells for between N3,850, N3870 and N3890 respectively.

She said the product that influences the patronage of consumers is Honeywell wheat, noting that this was not because of the quality but consumer choice. Another wholesaler, Mr. Emmanuel Okeke, at Ikotun market, Lagos; said: “The most purchased wheat meal product is Golden penny because it hppens to be the most preferred by customers.”

Madam Okafor, in the same market, said “Honeywell, Golden penny, Crown wheat are the three wheat brands competing seriously in the market.”

Manufacturer comments

A top official of Golden Penny who spoke on condition of anonymity said: “Wheat milling capacity is estimated to be at about 10million tonnes in 2017, up from eight million tonnes in 2013, with average capacity utilisation at 50percent.

He said the previous administration under the Agricultural Transformation Agenda (ATA) by the Ministry of Agriculture, developed the country’s Wheat Transformation Agenda (WTA). These consisted of the inclusion of cassava in bread flour, implementation of 15 percent levy on wheat importation as well as agricultural incentives aimed at spurring local wheat farming.

The WTA target for local production of wheat is 1.5million metric tonnes, MMT production by 2017. The government also expects to reduce wheat importation by 50 percent by 2017. Annual growth rate from 2017 onwards is projected at 20 percent, he stated.

The Country Head of Olam Nigeria, Mukul Mathur, said: “We are confident about the growth prospects in Nigeria, so expanding our participation here is a logical step to capitalise on the opportunity.   Our value-added export business in the country puts us in a strong position to generate the much required forex and actively support the Produce-Add-Value-Export, PAVE initiative of the Federal Government of Nigeria.”

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