Though many businesses keep providing good top-line results, Nigeria’s fast-moving consumer goods industry, home to some of the nation’s most well-known brands, is battling a major increase in operational expenses.
Financial figures from recent years reveal that six of the country’s top FMCG companies invested a cumulative N562 billion on cost of sales in the second quarter of 2025. This number shows a strong 24 percent rise over the ₦454 billion registered throughout the same period in 2024.
According to industry specialists, these increasing costs result from continuous inflation, foreign exchange volatility, and expensive raw materials. Though companies like Nestlé Nigeria, Cadbury Nigeria, Nigerian Breweries, Champion Breweries, Lafarge Africa, and UAC of Nigeria Plc have demonstrated amazing operational resilience, their profit margins are continuously being eaten into by rising input expenses.
At ₦181 billion, up from ₦145.2 billion in the last year, Nestlé Nigeria leads the list in Q2 cost of sales. This rise is evidence of steady demand across its product lines in addition to rising materials expenses. Likewise, Cadbury Nigeria saw a notable increase in operating costs—almost 31%, from ₦23.1 billion to ₦30.3 billion. Compared to ₦173.9 billion in the same quarter last year, Nigerian Breweries also showed a significant cost of sales of ₦210.08 billion.
The News Chronicle understands that although the naira has shown signs of short-term stability, many companies are still reeling from the longer-term effects of the currency’s depreciation in 2023 and 2024. The consequences are most visible in the procurement of imported inputs, which remain costly despite improved foreign exchange liquidity and slightly more predictable monetary policy.
Champion Breweries, on the other hand, reported a 20.7 percent increase in cost of sales, bringing the quarter at ₦3.5 billion, whereas Lafarge Africa’s operating costs surged from ₦75.8 billion to ₦95.8 billion.UAC of Nigeria Plc also announced a 22% increase, with cost of sales totaling ₦40.4 billion.
Despite having negotiated foreign exchange-related losses in previous quarters, these firms are still trying to transform higher sales into significant earnings. Analysts point to rising operating expenses, limited consumer buying power, and general macroeconomic instability as the reasons for the depressed profitability.
Investment expert stated that the high cost of imports and rising interest rates continue to create significant obstacles for businesses relying on them. Many FMCG companies are still under pressure as they try to reconcile pricing strategies with customer retention in an always-unstable economic context.
