Nigerian Breweries banks on price hike to enable it to maneuver through economic challenges
NIGERIA – Nigerian alcoholic lovers have been notified to brace themselves for a price hike effective August 10, 2023, by the country’s largest brewing company, Nigerian Breweries (NB) Plc.
“This is to inform you that we will review the prices of some of our SKUs (Stock Keeping Units) effective Thursday 10th August 2023,” read a letter dated 1st August 2023.
The decision conveyed in the letter cited the need to review prices due to the continued rise in input costs and the necessity to mitigate its impact.
Nigeria Breweries are the producers of popular beer drinks including Star Lager, Gulder, Legend Extra Stout, Heineken, Goldberg, Life, and Star Radler amongst others. They are also the producers of alcoholic-free drinks like Maltina, Amstel Malta, Fayrouz, Climax Energy drink, and Malta Gold.
Companies like NB PLC have and are still facing significant challenges in the country. Inflation reached 22.79 percent in June and the managed float of the forex market led to the naira exchanging for as high as N869/$ at the I&E window last Thursday.
The overall slowdown of the Nigerian economy and currency devaluation have further impacted profitability across various industries, including brewing.
Nigerian Breweries, a subsidiary of Heineken, reported N70.6 billion in forex losses as of June 30, 2023 (half-year financial results).
The company experienced a loss of N10.715 billion in the first quarter of 2023, compared to a profit of N13.61 billion in the first quarter of 2022.
Coupled with rising production costs and the ever-increasing cost of raw materials, this has created a challenging financial environment for the brewing giant.
In April, the brewery’s board and management sought shareholders’ approval for an intercompany loan of €110 million (US$121.36m) from Heineken International at its forthcoming annual general meeting (AGM).
During the announcement, NB Plc said it anticipates hyperinflation, a very high and typically accelerating inflation, to continue and will put pressure on disposable income, as well as affect economies, including its business.
“We will find ways to mitigate the challenges by being as efficient as possible. We would continue to listen to what the next generation of consumers wants and look at how we can make a difference,” Managing Director/CEO, Mr. Hans Essaadi explained.
Already Nigerian consumers are grappling with challenging economic conditions and stretched disposable incomes.
The price may force some consumers to reduce their beer consumption or seek more affordable alternatives. This shift in consumption patterns could potentially impact brand loyalty within the industry, as viewed by some market analysts.
For all the latest food industry news from Africa and the World, subscribe to our NEWSLETTER, follow us on Twitter and LinkedIn, like us on Facebook and subscribe to our YouTube channel.