Opportunities for organic beverages could be created by the Federal Government’s decision of implementing N10 per Liter Excise Duty on all carbonated, non-alcoholic and sweetened beverages.
It creates an opportunity to increase customer base and grow production, according to experts in consumer goods.
Organic beverages can be fresh or processed drinks that are made using organic farming methods. It refers to any beverage that is free from chemicals, additives or fillers. Examples include Zobo and Kunu as well as raw fruit juice.
Uchenna Uzo is a consumer expert and faculty member at the Lagos Business School. She says that those in the carbonated drinks sector might make organic versions of the products they produce or use organic raw materials.
Uzo says that there will likely be some innovations in the area of looking for cheaper alternatives so that taxes are minimized.
While efforts continue to implement the directive directive, affected manufacturers as well as the organized private sector push for a review of the directive and possibly a retraction, as it could lead directly to an increase in prices, which could impact their sales and volumes.
Ayorinde Akinloye is a United Capital plc consumer analyst. She notes that there will be opportunities for organic beverages, but that it will only matter how producers can maximize it to make them profitable.
Akinloye states that if they package their products in a way that makes them attractive and informs Nigerians about safety and health concerns, it will be a help.
Minister of Finance in Nigeria Zainab Ahmad stated that the directive is primarily designed to discourage excessive sugar consumption, which can lead to various health problems.
Grand View Research’s report on the organic beverage market states that in 2018, the global organic beverages industry was valued at $20.31 Billion. It is projected that this number will grow at a compound annual rate (CAGR of 13%) to reach $47.78 Billion by 2025.
The report states that organic products will be in high demand as people become more aware of the health benefits.
Thread Strategy, a business consultancy firm, stated in an article that there are clear signs that the demand for carbonated products has slowed.
Chioma Eze is a producer of Zobo drinks and Tigernut drinks. She says that the directive will help her expand her production. “People will now prefer Zobo for N100 which is cheaper than drinks laced in sugar and other unhealthy preservatives.”
Adio Omolayo is another Zobo maker. He says that organic drinks are easy to make and can be bought in bulk. The ingredients are then sold at the market within two weeks. It’s easy to make. The trick is to chill it with the right combination of sweetness and flavour.
Despite the potential for organic beverages to flourish and expand their business, manufacturers warn that there may be some challenges such as improving packaging which will increase production costs, preventing fermenting from the use of fruit, adhering strict regulatory provisions, etc.
Eze states, “As our business grows, we are obligated improve our products. This is a step with its own hurdles.”
This is confirmed by the Grand View report, which states that there are many barriers to market growth due to different certification standards and processes for commodities.
Market growth is also being hampered by the high cost of organic beverages compared to regular ones. It adds that major manufacturers are likely to invest in R&D to improve the quality, texture, flavor, and nutritional values of their products.
Zobo is a popular Nigerian drink made from Hibiscus leaves with ginger flavor. It is also available locally since it is homemade.
There are no regulations, as the purchase is entirely at the buyer’s own discretion. It is also often packaged in PET bottles from recycled sources, which makes it affordable. Similar results are achieved with organic beverages such as Tigernut, Fruit Juice, and Kunu.
Silas Onah is a trader from Oshodi and says that since N150 became soft drinks, he stopped drinking them. He would prefer natural beverages such as Zobo which he claims helps detoxify his body.
He states that it is cheaper than buying the ingredients and that you can make it yourself. This will save me money, and I won’t miss drinking sugary drinks and gas which leave me with health problems.
There are many opportunities. However, Abiola Gbemisola from FBNQuest, a consumer analyst, doesn’t believe Nigeria is an organic market. She says, “We haven’t gotten to that level of sophistication yet.” It is not an opportunity for Nigeria’s consumption market.