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Nigerian Breweries Best Positioned to Surmount Headwinds than Peer Rivals

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Nigerian Breweries Plc or “NB” is in the best position to surmount macroeconomic headwinds given its efficient distribution system and its wide factory footprints across the country.

The largest brewer by market capitalization in Nigeria is a cash-generating-asset, which is why it effortlessly outperforms peer rivals such as Guinness, International Breweries, and Champion Breweries.

A shoe has size, and everybody knows where they stand in society. There are those at the top of the pyramid, while the ones at the bottom try to catch up.

NB, with its first mover advantage (since June 1949), and installed brewing capacity of 21.2mhl and a broad range of products, had a market share of 54.30 percent as at December 2019.

That compares with International Breweries, (23.20 percent), and Guinness 22.10 percent.

Despite the Covid-19 crisis and the hike in value added by the government, NB saw net income increase by 38.59 percent to N7.65 billion as at March 2021.

That compares with Guinness’ 34.97 percent profit expansion, while international Breweries has been grappling with huge debt that culminated in operating losses even as there were improvements on sales.

NB is making more profit from its operations than its competitors, utilizing the resources of shareholders to generate higher profit.

Its net income margin expanded by 61 percent in March 2021, that compares with Guinness’ 18.15 percent, and International Breweries’ -6.62 percent.

The company has about 74 years of operating experience in Nigeria with nine (9) brewery plants, two (2) malting plants and two (2) distribution centres. NB runs a diversified product portfolio of alcoholic and non-alcoholic beverages, currently in the market with about sixteen (16) brands in the different segments of Lager, Stout and Malt.

Nigeria’s alcohol and beer consumption per capita of 10.9 litres (vs.22 litres African peer average, ex-North Africa), undoubtedly, makes a compelling case for beer volume growth.

However, a fragile economic recovery exacerbated by the Covid-19 crisis has hamstrung the industry as a lot of consumers have downgraded to cheaper brands as devaluation and inflationary pressures have left them impoverished; and poor regulation by the policy makers are complicating issues.

The National Bureau of Statistics (NBS) recently released the “2019 Poverty and Inequality in Nigeria” report, which highlights that 40 percent of the total population, or almost 83 million people, live below the country’s poverty line of 137,430 naira ($381.75) per year.

The jobless rate in Nigeria rose to 33.3 percent in the three months through December. That’s up from 27.1 percent in the second quarter of 2020, the according to the statistics body.

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