Consolidated Breweries Plc is set to merge with Nigerian Breweries Plc. In this article which featured in Thisday, they discuss their 2013 results and challenged in the beer industry. Worthy reading for investors.
Consolidated Breweries Plc invested N15 billion to boost its efficiency and remain competitive in the industry. The Managing Director of the company, Mr Boudewijn Haarsma, who disclosed this noted that the investment was made in two years.
According to him, in spite of increased competition in the value for money segment, Consolidated Breweries Plc has been able to sustain its leadership.
“If you take the totality of our investment in the last two years, it amounted to about N15 billion. In 2013 alone, N6billion was invested in new equipment, capacity expansion and process standardisation.
“This has created improvements in our operational efficiency and cost savings. The impact of these measures, although not yet very visible in our 2013 results, is already manifesting in our performance in the first quarter (Q1) of 2014. In Q1 of 2014, we reported very strong volume growth well ahead of the market average,” he said.
Consolidated Breweries ended 2013 with an increase of 12 per cent net profit. While revenue for 2013 closed at N34 billion, profit after tax rose from N1.103 billion in 2012 to N1.237billion in 2013.
Haarsma decried the inclement operational environment, saying growth in the beer market stalled over the last two years, following several years with average growth rates of 10 per cent.
“The slowdown in growth was on account of increasing pressure on consumers’ disposable income. At the same time, sales of the most affordable brands in the market, also known as the ‘value for money segment’, grew faster than before.
“This led to significantly increased competition in the ‘value for money segment’ as all brewers have reacted to the changing market dynamics and are increasing their commercial focus and investments behind their more affordable brands,” he said.
Despite the competition, the Chairman of Consolidated Breweries Plc, Prof. Oyin Odutola-Olurin, expressed confidence in the Nigerian beer market saying it has potential for positive growth in the coming years.
She said the recent acquisition and investments have, therefore, positioned the company for better performance in the years ahead.
“Our recent acquisitions and investments in capacity expansion have positioned our company for future growth and competitiveness”, she said.
Apart from capacity expansion, Consolidated launched a new bottle for its flagship brand, “33” Export lager beer in 2013. The product, the company said, has been very well received in the market.
This article first appeared in Thisday