Rite Foods competes for market share after N30bn investment

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With N30 billion worth of investment already down, Rite Foods Limited has tripled production capacity to capture a large share of the sausage rolls and Carbonated Soft Drinks segments.

The production of its soft drink in different variants of Cola, orange, bitter lemon, apple, soda water and two exclusive variants is further widening competition in the CSD segment dominated by Coca-Cola, Pepsi and La Casera.

BusinessDay visited the Ososa, Ijebu factory of the food and beverage company in Ogun State. Findings revealed that the company’s production volume for soft drinks has moved up by 300 per cent to meet up with growing product demands.

Read: RITE FOODS RECEIVES ISO 9001 CERTIFICATION TO EXPAND INTO WEST AFRICA (PICTURES)

The company upped daily production of its soft drinks to 120,000 packs from 30,000 in 2017, and currently produces 9,000 cartons of sausage rolls daily from 5,000 cartons, a year before.  “We started with one production line in 2016. Now, we have four lines, and by November 2018, we’ll add two more lines, “Seleem Adegunwa, managing director, Rite Foods told BusinessDay.

The carbonated soft drinks (CSD) segment in the country has continued to grow despite consumers reduced purchasing power. Research into the CSD market shows that there are over 18 carbonated drinks competing aggressively for market share in the country.

Coca-Cola and Pepsi, the two big players in the CSD market hold the largest market share of 50 per cent and 40 per cent respectively, leaving 10 per cent share for smaller players. Coca-Cola has a global brand value of about $79.4billion, and Pepsi about $19.6billion.

In a bid to increase market penetration, manufacturers of soft drinks have adopted different strategies to expand the reach of their products and gain new consumers. This has further deepened the battle among manufacturers for larger chunks of the soft drinks market. To attract more patronage and create loyalty, Rite Foods offers consumers more quantity product for less amount and less than two years in the market, its Bigi drinks are challenging similar variants of dominant brands.

Bigi Cola’s 60cl drink retailed at N100 is competing with the 60cl Coca-Cola sold for N150 and 50cl Pepsi which sells for N100. Bigi Orange is also challenging Fanta and Mirinda drinks.

In October 2015, Big Cola, a soft drink produced by AJE Group, a privatively-owned multinational beverage company with headquarters in Lima, Peru, gained entrance into the Nigerian market, offering consumers more quantity and selling 65cl at N100 against competitor’s (Coca-cola and Pepsi) 50cl for N100.

Two months later, Pepsi, one of the dominant brands responded to the competition with the launch of its new 60cl ‘Long Throat’ bottle retailed at the same price as its former 50cl bottle.

In a bid to stay ahead of the competition in the soft drinks market and also drive more sales for its products,  Coca-Cola Nigeria Limited upped it’s ante in February 2016, with the release of a 60cl PET bottle as a direct challenge to both Big Cola and Seven-bottling company’s ‘longthroat’ PET bottle drinks.

In October 2016, most beverage companies reduced the number of their soft drinks by 17 per cent on the back of soaring inflation. Coca-Cola Nigeria Limited and 7up Bottling Company cut the sizes of all their PET bottle drinks to 50cl from 60cl for the same price of N100.

Coca-Cola Nigeria increased quantity again in 2017 to 60cl and sold drinks for N150. The brand also introduced a 35cl PET bottle which is sold for N100.

In the same year, Rite Foods increased the number of their drinks to 60cl from 50cl and it’s retailed for the same price of N100.

Currently, the battle line is drawn between Bigi Apple, a variant of Bigi drinks and La Casera, produced by The La Casera company, with the former gradually pushing the latter out of the market.

As a direct response to 60cl Bigi Apple drink which had warmed its way into the hearts of consumers, makers of La Casera drink increased content by 20percent to 60cl from 50cl at the same price of N100. But the drink is sold between N100 and N150 at different stores nationwide.

However, a huge challenge for Bigi Apple and other Bigi drinks is that of visibility as the product is not properly circulated outside the South-Western States.

As the competition in the CSD market gets stiffer, it remains to be seen what innovation moves other soft drinks brands will make to increase patronage and grow their market share.

 

This article appeared first in Business Day Nigeria…

 

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