Nigerian Breweries to expand premium lager leadership while driving malt growth

NIGERIA – Nigerian Breweries (NB Plc) aims to expand its leadership in premium lager, build scale in mainstream segment and drive malt growth as new strategies to drive both volumes and sales.

According to Beverage Industry News, the strategy helps NB Plc, the country’s largest brewer to counter stiff competition from rivals such as International Breweries Plc, a subsidiary of AB InBev and Guinness Nigeria Plc.

Additionally, the company is looking to build stronger partnerships with retailers and distributors.

Based on the firm’s market valuation, Nigeria remains attractive given that 70% of the population is under 29 years of age with increasing urbanization.

Other factors supporting the industry include declining inflation to 11%, exchange rate stabilization, rising oil prices and growth in GDP, from negative to nearly 2% at the end of Q1 2018.

NB Plc noted that digitization is now playing an increasing role on how consumers interact with the brands as well as how it interacts with consumers as nearly 95 million Nigerians out of a population of 193.4 million are internet users.

While beer consumption in Nigeria continues to lag at nine litres per capita when compared to an African average of 22 litres per capita, the brewer said this presented a room for growth in this sector.

Lager is expected to remain the bulk of the category at about 82% in 2017 and declining marginally to 81% by 2020 and according to the company, consumers have been down trading to cheaper brands which is a new reality.

Stout make up 10% of its portfolio, while other categories make up the rest.

For the year 2018, the company expects pressure on profits to continue as a result of consumer down trading, currency devaluation and material cost inflation.

In the first quarter of this financial year, NB Plc’s profit declined 22% to US$49.78 million as costs generally failed to go down alongside with sales revenue and that has weakened the company’s profit capacity.

The company is losing strong growth momentum and this may be impacted more by the runoff to the 2019 general elections.

Outlook for the year expects low consumer confidence to continue hurting sales and revenue.

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