Nigeria: Brewers’ revenue growth drops 13% in 2023

Beer manufacturers’ revenue growth from customers dropped 13 percent in 2023, as spikes in the prices of goods and services are amplifying a cost-of-living crisis in the country, Business Day reported on June 3.

The latest financial statements of listed brewers show that the industry revenue growth stands at 13 percent in 2023 lower than the 22 percent growth recorded in 2022.

“The main reason for their revenue growth reduction is that inflation has reduced purchasing power and disposable income of Nigerian consumers,” Femi Egbesola, national president of the Association of Small Business Owners of Nigeria, said.

He noted that the country’s accelerating inflation is forcing consumers to prioritize their needs.

Nigeria’s headline inflation in March 2024 accelerated to a record high of 33.2 percent from 31.70 percent in February.

Nigerian Breweries said in a statement that soaring inflation rates and foreign exchange volatility contributed to its net loss of N106 billion in 2023.

In an April 12 note published on the Nigerian Stock Exchange, Nigerian Breweries said it will conduct a company-wide restructuring as part of its strategic recovery plan following the loss.

The brewer said the reorganisation is targeted at securing a resilient and sustainable future for its stakeholders. “This move comes after the Company recorded a net loss of approximately N106 billion in its 2023 full-year results,” the statement said.

“The loss follows a combination of challenging economic factors ranging from heightened operational costs, continued pressure on consumer disposable income, escalating inflation rates, FX volatility, amongst others,” it added.

As a result of the accelerating inflation, brewers operating in Nigeria were compelled to raise prices amid high operating costs.

Nigerian Breweries announced another price increase on some products effective February 19, 2024. This was revealed in a statement by Lekan Awosanya, the company’s zonal business manager – West, on June 3.

Nigerian Breweries produces major alcoholic products like Star Lager, Gulder, Legend Extra Stout, Heineken, Goldberg, Life, and Star Radler amongst others.

Similarly, Guinness Nigeria and International Breweries Plc implemented a price increase on all their products.

Both firms ascribed the latest price increase to the rising cost of production and the cost of doing business.

The affected products are Guinness Stout, Guinness FES, Guinness Smooth, Malta Guinness, Dubic Malt, Smirnoff Ice, Orijin, Orijin Bitters, Gordon’s Pink Berry, Gordon’s Sunset Orange, Gordon’s Moringa Citrus, Smirnoff X1 Smooth and Choco, Captain Morgan and Orijin Herbal Gin.

Based on the price increase, cumulative revenue for Nigerian Breweries, International Breweries, Guinness Nigeria and Champion Breweries surged to N1.02 trillion in 2023 from N900 billion in 2022.

Nigerian Breweries recorded a total revenue of N599.5 billion from N550.5 billion. International Breweries revenue rose to N260.6 billion from N218.7 billion.

Guinness Nigeria’s revenue for the six months ended December grew to N142.6 billion from N118.5 billion while Champion Breweries’ revenue increased to N12.7 billion from N12.3 billion.

Uchenna Uzo, professor of marketing at Lagos Business School said, “Prices have been going up faster than the customer can bear and for that reason, there has been a fall in demand for some categories of beers.

“There has also been a bit more varieties in terms of different types of beers other than the traditional premium lager that customers have available to them and there are cheaper variants so people are willing to explore lower quality alcoholic beverages at cheaper prices.

“The economic instability is also affecting the growth because the major component of manufacturing cost is energy, cost of power generation, costs of distribution which has affected the quantity of what can be produced. People are not buying as much as they would before the economic conditions in Nigeria,” Uzo said.

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