The sachet economy: An effect of widespread poverty and a recipe for environmental disaster.
“A poor man doesn’t really care about the depletion of the ozone layer or the danger of single-use plastic. He is too preoccupied with surviving.” That was a friend’s response to my proposed solutions to plastic pollution in Nigeria. I have since realized that poverty is a contributing factor to environmental degradation in more ways than a poor man’s indifference.
Recently, there have been discussions around the decision of a premium liqueur brand, Baileys, to repackage one of its bottled products into 45ml sachets. This is not the first brand to repackage its product into smaller packets. Popular household items such as Dettol (Antiseptic), Hypo bleach, Power oil, Morning fresh dishwashing liquid, Quaker oats, Golden morn, among many others have been repackaged into small single-use sachets. The trend suggests these brands will not be the last. While it would be interesting to talk about Baileys’ business strategy, a more salient discussion is why “sachetization” has become a popular trend for businesses, and the socio-economic implications of this trend for Nigeria.
Thinking about the Nigerian market, what comes to mind and what often appears in pitch decks is the huge prospect of a market with about 200million people. This large population is however plagued with extreme poverty and disappearing middle class. According to the National Bureau of Statistics, Nigeria’s poverty rate stood at 40.1% in 2019. That is, over 80 million people were living on about N380/day (then $1, now 80cents). Also worthy of note is the economic impact of the COVID-19 pandemic and skyrocketing inflation on a huge percentage of Nigerians already living in poverty.
These statistics imply that to be profitable selling to Nigeria’s mass market, businesses must sell essential products at extremely affordable prices. In response to the declining purchasing power of Nigerians, consumer goods companies have been repackaging products into smaller sizes using sachets. Sathetization is a common concept across emerging markets as a strategy for penetrating the poorer markets. While management consultants and brand promoters tout portability and portion control as the benefits of small sachets, that is not the main intention behind “sachetizing” products. Rather, in this case, it is a strategy to remain affordable to Nigerians who have become poorer over the years.
I engaged a brand manager at one of the international fast-moving consumer goods (FMCG) companies operating in Nigeria on this topic. Explaining their business reality, he said: “Sachet wins in Nigeria because 80% of Nigerians are in the tier 3 category of shoppers. So, if you want stores to carry your product, you have to sell what a large percentage of the population can afford. Otherwise, you will spend a huge percentage of your marketing budget on expensive campaigns to reach the 20% in tier 1 & 2.”
Gaia describes the sachet economy as big problems in small sachets. For a solution designed to make products more affordable, sachets are expensive in many dimensions — for individuals, households, and the society. A simple analysis shows that buying goods in smaller sachets is not any cheaper than purchasing larger quantities. For example, the retail price of a 50g sachet of golden morn is #100, 10 sachets cost #1000. However, the retail price of a 500g pack is #750. In summary, purchasing small packets of golden morn will cost approximately 33% more.
Besides the additional financial cost, sachets add to the compounding problem of pollution. Waste disposal is a nightmare in Nigeria. Recycling facilities are few and overwhelmed, and Nigerians do not have a recycling culture. This shouldn’t come as a surprise, given the indifference to environmental concerns that poor people — a significant portion of Nigeria’s population — tend to have. Not to say that the “middle class” is any more environmentally conscious.
Even if attempts are made to recycle, recycling technology for multi-layer flexible sachet (which is mostly used to for sachet drinks and household items) is still underway. In 2017, Unilever developed a technology to recycle multilayer sachets but the technology is not widely available across the world yet. In Nigeria, the few recycling facilities available mostly recycle plastic waste and do not have the advanced technology for mutilayered sachets yet.
The points discussed above are not to vilify the companies adopting “sachetization” as a marketing strategy. Rather, they are to point out the impact of poverty on the larger society and how widespread poverty makes it more difficult to tackle secondary yet important problems like environmental sustainability and pollution. In discussing pollution and other environmental challenges, poverty is hardly considered as an important factor. For the companies that have chosen to produce in smaller packets, they are also victims of failed economies and are simply struggling to “adapt or die”.
The sachet economy is indeed a recipe for environmental disaster. During a recent Twitter discussion, A marine engineer tweeted: “These sachets end up in our water bodies. Ask sailors. Nigeria waterways is an environmental disaster already happening.” The pollution of waterways is a global problem; however, developed countries are attempting to solve the problem through various means such as reduction of plastic packaging, development of recycling technology, strict regulations on producers and promotion of environmentally friendly consumer culture.
To successfully tackle pollution and prevent environmental disaster, the Nigerian government, companies, and individuals must contribute to solving the problem.
· The government: Apart for tackling poverty, strict laws should be made to promote responsible production and waste management, and recycling should be prioritized.
· Companies: Investment in the recycling of product packaging or partnership with recycling companies, promotion of waste for product initiative as well as consideration of paper packaging.
· Individuals: Reduction of plastic consumption by using reusable bags for shopping and turning down unnecessary nylon bags, patronizing recycling centers (Wecyclers and Cycled tech operate in Lagos), adoption of bulk- buying co-operative with friends and family.
If we look beyond the small satchets of our favourite consumer goods we will see largescale poverty and an impending ecological disaster that musn’t be ignored.
