El Duelo migratorio en la niñez.

The Food and Beverage industry is largely dominated by international companies who control about 85% of the market while the remaining 15 % is controlled by indigenous companies. Over the past few years, the Nigerian Food and Beverage industry has maintained a leading position in the contribution to household expenditure (Business Monitor International, 2015). According to the National Bureau of Statistics (NBS), Nigerian Food and Beverage industry is the largest contributor to the manufacturing sector accounting for 60% of the manufacturing sector‟s output between 2010 and 2014.

BMI(2014) also reported that Compound Annual Growth Rate (CAGR) of household expenditure grew at 15.3% to N63.52tn in 2014 from N41.44 tn in 2010. This growth was said to have been driven largely by Nigeria‟s middle class income earners, rising population, urbanization and favorable demography. However, this performance has been on the decline which is blamed on unfavorable operating environment such as inflation caused by the fuel price hike, insecurity challenges in some part of the country, and the recent fall in crude oil price. Nonetheless, BMI forcasted a 3 year CAGR of 10% in food and beverage spending to N33.34tn in 2018E from N24tn in 2015. The industry is expected to record positive growth on account of the viability of the sector expected to be driven by favorable demography, increased spending. Fig 2.4 shows a summary of consumer spending on food and beverage products in Nigeria

Fig 2.4: Consumer Spending in the Food and Beverage Industry

Source: Chapel Hil Denham securities (2015).www.chapelhilldenham.com. pg 2 0

5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000

2012 2013 2014 2015E 2016E 2017E 2018E 2019E

consumer spending

Overview of Guinness Nigeria Plc

Guinness is one of the leading alcoholic and non-alcoholic beverage companies in Nigeria with the dominant market share in the stout segment. The Company‟s strong market share in the brewing segment of the food and beverage industry in Nigeria is supported by a good brand name, technical & product quality assistance from its parent company.

However, poor performance has plagued the company in recent times.

The decline in performance was associated with the current weak macroeconomic environment and declining consumers‟ effective disposable income. Despite the uptick in revenue growth during FYE 2015, higher operating and finance expenses eroded the gains thus resulting in a lower profit before tax margin of 9% (FYE 2014: 11%). a review of the unaudited accounts for the six months ended 31 December 2015 showed a 65% decline in profit before tax when compared with corresponding figures of 2014. In our view, Guinness‟ profitability is declining and requires improvement. However, Guinness Nigeria PLC recorded a satisfactory return on equity of 22% (FYE 2014: 26%) which is above the average yield on treasury certificate in the same period. Subsequent to year end, there has been changes in senior management with a view to turn around the fortunes of the Company as well as improve cost management amidst the challenging operating environment. Though Guinness Nigeria PLC expected gains from these initiatives, In FYE 2015, Guinness optimized its stock of raw materials to meet manufacturing demand as opposed to yearly build-up of raw materials as well.

Fig 2.5 Profit After Tax of Guinness Nigeria Plc(2013-2016H1) Source ; Guinness Nigeria PLC annual financial statement (2016)

0 2E+09 4E+09 6E+09 8E+09 1E+10 1.2E+10 1.4E+10

2016H1 2015 2014 2013

Overview of Nestle Nigeria Plc

Nestle Nigeria Plc is a subsidiary of Nestle S.A of Switzerland which together with Nestle CWA limited own 62 percent of Nestle Plc. It is a global company with specialties in food manufacturing and marketing. Nestle Nigeria Plcstarted operations in Nigeria as a simple trading organization in 1961. It became a public company on April 20, 1979. The Company operates majorly Food products. These include the production and sale of Maggi, Cerelac, Nutrend, Nan, Lactogen and Golden Morn, Milo, Chocomilo, Nido, Nescafe and Nestle Pure Life. The Company manufactures and markets a range of brands, which include Infant Formula-Nestle NAN, Nestle LACTOGEN, Infant cereals-Nestle NUTREND, Nestle CERELAC, Family cereals-Nestle GOLDEN MORN, Confectionery-Nestle CHOCOMILO, Confectionery-Nestle KITKAT, Bouillon-MAGGI Cube, MAGGI Mix'py and Table Water-Nestle PURE LIFE. Its products include MAGGI Star Cube, MAGGI Crayfish, MAGGI Chicken, Ginger & Garlic, Golden Beef and Classic. It is also involved in export activities as it exports some of its products to other countries within Africa. The company also continually explores the use of local raw materials in its production processes and has also successfully introduced the use of locally produced items such as soya bean, maize, cocoa, palm olein, cassava, starch, wheat flour and sorghum in a number of its products. Distributors of the company‟s products are spread all over the country. Nestle Nigeria Plc procures all of its raw materials on a commercial

Fig 2. 6 Profitability Trend of Nestle Nigeria Plc (2013-2016H1 Source: Financial statements of Nestle Nigeria Plc (2016)

basis from overseas and local suppliers.Fig 5 above shows the profitability trend of Nestle Nigeria from 2013 to 2016. It reveals the fluctuations in the profit of the company.

Although the company‟s profit recorded a better performance in the first half (H1) than the previous year, its profit declined 94 per cent to #536m in its first Half(H1) period compared to #8.88b recorded in the previous year.

0 2E+09 4E+09 6E+09 8E+09 1E+10 1.2E+10

2016H1 2015 2014 2013

PAT

Over view of Cadbury Nigeria

Cadbury Nigeria Plc was incorporated in 1965 and was listed in the Food/Beverages subsector of the Nigerian Stock Exchange in 1976.The company is a producer/manufacturer of sugar confectionery, gum and food products for the Nigerian and West African sub-region markets. Some of its leading brands includes; Tom Tom, Bournvita and Bubba bubble gum, Eclairs, Chocki, Trebor Mints, vitaminised candy, and Creme Rollers. Cadbury is 75per cent owned by CSOL, a subsidiary of Cadbury Plc, a UK based global confectionery company. The remaining 25 per cent is held by a highly diversified spread of Nigerianindividual and institutional shareholders.The company has one subsidiary, Stanmark Cocoa Processing Company Limited, a privatecompany engaged in the processing of cocoa beans to butter, powder, liquor and cake and which supplies all the cocoa powder needs of the Cadbury. SCPCL is per cent owned by CadburyNigeria.The company recently did a rights issue of N22.2 billion through an offer of 7 new ordinary shares for every 3 ordinary shares held at a price of N8.65 per share which was 85.56per centsubscribed.

The Company's lead brand in the food drinks business is Bournvita, which holds a strong market share of the Nigerian food drinks market. The main brands in the Company's confectionery business include Tom Tom and Buttermint, for sale in Nigeria, and Hacks and Ahomka Ginger, which are exported to neighboring West African countries. Each brand has grown to become a household name, and each holds a strong market share in their segments.Cadbury recently did a strategic review which was followed by an extensive restructuring exercise to restore its path to profitable growth by identifying significant growth potentials in its core brands. It stopped the production of some of its famous brands such as Richoco, Stimorol, Bubba bubblegum and Eclairs and redeployed resources towards the development and expansion of its core profitable brands such as;

Bournvita, Tom Tom and Butter mint to drive earnings.Fig 6 represents Cadbury profitability trend from year ended 2013 to first half of 2016. Cadbury Nigeria Plc has been going through a dwindling profit since 2013 when it recorded a high profit of #35.7 billion. Profit declined in 2014 to #1.1 billion but was later restated as #2.1. Cadbury 2015 full year results revealed a profit after tax of #1.1 billionwhich is much lower than #35.7 billion profit declared by them for 2013.

Fig. 2.7 Profitability trend of Cadbury Nigeria Plc (2012-2016Q1) Source: Financial Statements of Cadbury Nigeria Plc (2016)

2.2 Theoretical Framework