Procter & Gamble Issues A Disclaimer To Fake Employee Story

Procter & Gamble is in the process of shutting down its multi-billion naira plant in Agbara, Ogun, barely a year after the leading American FMCG leader decided to expand into the Nigerian market, according to Premium Times. 

First opened in 2012, but expanded in June 2017, *the $300 million, 40.2-hectare production facility* produces diapers and a range of sanitary pads, including the popular Always brand.

While the company has not issued any official statement regarding the shutdown speculation, Procter & Gamble has struggled to break even over the past year due to challenges ranging from government regulations, stiff competition, and inadequate access to raw materials, the online newspaper quotes sources as saying. About *120 employees* are gradually being laid off as part of the facility’s closure.

A 2017 Nairametrics analysis found that Hayat Kimya Group, makers of Molfix, has a market leading 44 percent of the diapers market with Procter & Gamble second at 37.3 percent. 

P&G Nigeria is currently in the throes of a brutal lesson in frontier market economics. Banking on continued growth in Nigeria’s health product market – which at ₦89.1 billion, a growth rate of 8 percent according to Euromonitor estimates, and fuelled by population growth, consumer behaviour changes, as well as access to funding from local and international markets, is huge – the American consumer goods giant introduced three of its best performing global diaper lines which required an uninterrupted power supply to maintain production and created a logistics and distribution systems that was acclaimed at the time as a global benchmark. 

Then the reality of forex shortages and cheap competition set in. Perhaps more importantly, its parent company is in the midst of its worst crisis ever, reducing staffing by 25 percent globally since 2013 and with an activist investor on its board who is keen on shutting down unprofitable projects. Their main Nigerian competitor is probably the cautionary tale in not rushing exuberantly into investing in a chaotic market. 

Turkish firm Hayat Kimya stormed the market in 2015 by importing and pricing its Molfix brand at a discount to established brands like Dr. Browns, Pampers, and Huggies. Having captured a substantial market share, the company then established its first domestic plant, thus cementing its position in the industry. This case proves that despite huge entry barriers to certain industries due to high upfront costs, competitors can cause market disruption on the back of a well-designed importation and trading strategy. 

Summary, these complications make for a discomfiting appraisal of Nigeria’s nascent industrialization drive.