WP_DEBUG COVID-19: Consumer Goods Sector Hardest Hit - Survey - Brand Spur

COVID-19: Consumer Goods Sector Hardest Hit – Survey

Must Read

Audi electrifies FC Bayern Munich (Photos)

Enabled by the partnership with Audi: FC Bayern Munich is the first international football club to drive using electric...

#BBNaija: Betway Launches New Predict and Win Promo

Betway, premium gaming and online entertainment brand, and the headline sponsor of Big Brother Naija has launched a new...

How To Block Your Bank Account And SIM Card In Case Of Emergency

Losing your phone and wallet or having them stolen can be very frustrating. However, in case that happens to...
- Advertisement -

A recent survey conducted by REACH Technologies, a Nigeria-based fintech, on behalf of FBNQuest, corroborates findings from the NBS COVID impact survey that consumers have fallen on harder times. We infer from the survey that Income levels are down by an average of 30% since March, while job opportunities are fast disappearing.

Another sticking point is that consumption of non-essentials has been cut drastically. Respondents stated that they have reduced spending on higher-value category items by c.22% since March.

Although overall consumption has reduced since the pandemic started, the least spending cuts were made on food and health, which respondents viewed as most essential.

It is now becoming clear that the consumer goods sector is among the hardest hit by the economic crisis brought about by the COVID-19 pandemic. The fragility of household wallets has been laid bare, with statistics now pointing to even weaker consumer sentiments.

The knock-on effect of fading demand and weaker oil prices are also stifling earnings of consumer goods companies. The market has responded sharply to these challenges by marking these companies down. Year-to-date, the consumer goods index is down -28% – the worst-performing index, behind the broad market index’s -7%.

- Advertisement -

The consumer companies have also entered an exceptionally tough phase. Following the crude price collapse in March, accessing foreign exchange at higher interbank rates made obtaining raw materials more challenging.

The companies are only able to obtain dollars at rates of around N360-390/US$ relative to N330-360/US$ pre-oil collapse. That aside, given that consumer wallets are under pressure, passing on price increases to combat heightened competition comes at a great cost.

Read Also:  House Of Reps Approve N1.64 Trillion Borrowing Benchmark To Fund 2019 Budget Deficit

Among the publicly-listed companies, Q2 results – most of which will have been published by late July) – will reflect more of the COVID-related challenges, given that the lockdown took effect in late March. The other pressure point expected to be seen comes from FX losses booked by the listed companies in their financial statements as a result of the currency depreciation.

Essentially, the information provided by REACH confirms that consumer sentiments have turned sourer, with only 3% of respondents claiming that they are benefiting from the pandemic. More recently, the VAT increase in February and an impending hike in electricity tariffs potentially tighten the squeeze on disposable incomes further.

- Advertisement -

An acute downturn in spending is therefore increasingly likely this year. The IMF projects a GDP contraction of 3.4% in 2020, while the labour ministry expects unemployment to rise to levels above 33.5% from 23% in Q3 2018 (last publication). Indeed, recent media reports are already pointing to job losses in key sectors.

A few sectors have gained considerable ground on the back of the pandemic. In this regard, the telecoms sector comes to mind considering that increases in remote communications and internet entertainment drove demand for data.

Read Also:  Northern Nigeria Flour Mills declares a FY gross dividend of 0.15 NGN per share, fixes AGM for Sep 8

The consumer goods sector in marked contrast finds itself in the unenviable position of being hit hard. That said, investors need to ensure that their consumer goods exposures are tilted in favour of companies like Nestle Nigeria, which has a proven track record of handling this level of pressure based on historical precedent.

- Advertisement -
COVID-19: Consumer Goods Sector Hardest Hit - Survey - Brand SpurCOVID-19: Consumer Goods Sector Hardest Hit - Survey - Brand Spur

Subscribe to BrandSpur Ng

Subscribe for latest updates. Signup to best of brands and business news, informed analysis and opinions among others that can propel you, your business or brand to greater heights.

- Advertisement -

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

COVID-19: Consumer Goods Sector Hardest Hit - Survey - Brand SpurCOVID-19: Consumer Goods Sector Hardest Hit - Survey - Brand Spur

Latest News

Lagos Commissioner Commends Traffic Radio for Projecting Government Policies

The Honourable Commissioner for Information and Strategy, Mr. Gbenga Omotoso has commended Lagos Traffic Radio for its drive and...

Stock Recommendations for the Week (21/09/2020 – 25/09/2020)

Last week, investors wealth on the local bourse appreciated by ₦10.4 billion following bargain hunting on medium and large-cap Industrial goods and Consumer goods...

Agusto & Co. assigns a fund credit quality rating of “A+(f)” and fund volatility rating of “FV5′ to Coronation Fixed Income Fund. 

Agusto & Co assigns A+(f) credit quality and FV5 volatility ratings to the Coronation Fixed Income Fund (“CFIF” or “the Fund”). The rating reflects...

Olam Cocoa hits 100% traceability target across its direct global supply chain

Olam Cocoa, a leading supplier of cocoa beans and ingredients, today announces it has achieved 100% traceability of directly sourced cocoa across its global...

Founder and CEO of 54gene Selected as Endeavor Entrepreneur

 Endeavor has welcomed a new entrepreneur into its global network; Dr Abasi Ene-Obong of 54gene was selected as an Endeavor Entrepreneur on September 17, 2020. 54gene is a...
- Advertisement -
BrandsPur Weekly Cartoons
- Advertisement -COVID-19: Consumer Goods Sector Hardest Hit - Survey - Brand SpurCOVID-19: Consumer Goods Sector Hardest Hit - Survey - Brand Spur