In line with our prognosis (see here), price increases and volume expansions were critical to revenue growth in 2022, with our consumer goods coverage companies growing by an average of 29.6% over the period. We expect this top-line momentum to taper slightly on the cumulative impact of higher inflation, weaker naira, and tighter monetary policy. However, we are broadly positive on margins as the combined impact of higher prices and energy cost moderation will likely mask pressures from higher raw material prices and finance costs. Drags from finance costs are likely to reflect the impact of higher yields, while input cost pressures may be stoked by passthrough from currency weakness.

We expect our consumer goods coverage to grow revenue by an average of 13.0% YoY in FY'23 (vs 28.6% YoY in FY’22E), aided by sustained price increases, sachetisation, and deliberate export ramp-up. To the first point, support will likely stem from the constant upward price adjustments across the FMCG space since 2021. Market intelligence also revealed that these price increases were more observable across the product portfolios of Flour Mills and Dangote Sugar on average—possibly reflective of attempts to pass on increases in the cost of flour and raw sugar, which are almost entirely imported into the country. The prices of select alcoholic beverage brands such as Origin (+26.9%), Guinness (+23.4%), and Heineken (+15.6%) were also materially marked up between May and September 2022—extending the pattern seen in over three quarters.