Easing Inflation and Stable Naira Set to Power FMCG Sector Growth in Q3 2025, Analysts Predict
Nigeria’s Fast-Moving Consumer Goods (FMCG) sector is on track for a strong rebound in the third quarter of 2025, as easing inflation and a relatively stable naira boost consumer spending and company margins. According to a new report by investment firm CardinalStone, titled “Q3’25 Earnings Preview: Strong Macros to Support Earnings,” analysts forecast broad-based margin expansion across major food, beverage, and household product companies listed on the Nigerian Exchange (NGX). The report attributes the expected upturn to improving consumer sentiment and a healthier macroeconomic environment compared to the same period last year.
CardinalStone’s analysis reveals that the recovery in household purchasing power has fueled renewed demand for essential goods, leading to higher sales volumes across key product categories. “Volume recovery remains the dominant theme across food and beverage players, reflecting gradual improvements in household wallets,” the report stated. Analysts added that companies also benefited from reduced production costs, as a steadier foreign exchange market helped moderate expenses on raw materials and packaging. This development marks a turnaround from previous quarters, where inflation and currency volatility heavily eroded profit margins.
While the overall outlook for the FMCG industry is upbeat, the report noted that seasonality will likely temper the performance of brewery companies in the third quarter. Historically, Q3 accounts for just about 22% of annual revenue for brewers, compared to roughly 26% in other quarters, due to fewer public holidays and festivities. Nigerian Breweries and Guinness are projected to post stronger year-on-year results but slightly weaker quarter-on-quarter performance. Analysts believe that Guinness’s resilience may be tied to its product portfolio, which leans toward affordable, non-premium brands that maintain steady demand during slower consumption periods.
In contrast, food and household goods manufacturers such as Nestlé Nigeria, Unilever, and UAC Nigeria are projected to deliver robust growth driven by higher product volumes and improving cost efficiency. Nestlé is expected to sustain its upward trend in topline performance, with revenue expansion backed by stronger consumer demand. Unilever’s diversified product mix and UAC’s operational streamlining — including its shift to biomass energy and optimized distribution — are also expected to enhance profitability. CardinalStone noted that UAC’s efforts to refinance short-term loans could help reduce interest expenses, further supporting earnings.
Sugar producers are also expected to benefit from favorable cost dynamics. Dangote Sugar Refinery is projected to record faster revenue growth in Q3, supported by declining global sugar prices and a stronger naira, which are both easing import costs. However, its reliance on short-term borrowings remains a concern due to high domestic interest rates. BUA Foods, meanwhile, is set to post significant revenue growth in its bakery flour segment, aided by reduced inflationary pressures and a benign exchange rate environment. Overall, analysts remain cautiously optimistic, predicting that the FMCG sector’s performance in Q3 2025 will signal a broader recovery for Nigeria’s consumer goods market.
source: Punch