Forget the pun, a beer war has brewing for sometime now. However, the last two weeks have witnessed two major launches by Nigeria’s top brewers.
Nigerian Breweries last week launched Tiger Beer into the Nigerian market. Tiger Beer had been present in other parts of the world, notably Singapore, South Africa, India, Thailand and the United States to mention a few.
AB Inbev through International Breweries, had also recently launched Castle Lite beer. They also launched Budweiser into the country weeks earlier. Prior to its launch, both beers have been present in several African countries and have brand appeal.
Competition is tightening
The launch of the two beers means competition is stiffening between both firms. International Breweries was quick to catch the change in the trend to lighter and much cheaper beers.
The company by mid year will launch a brewery in Shagamu which would enable it to penetrate parts of the South West where it had hitherto been absent.
Interesting to note that the competition is not only within the value segments but has now moved to premium segments with focus on internationally known brands.
Where is Guinness in the mix?
Guinness is yet to issue is response, perhaps due to the appointment of a new Managing Director. It’s not news that Guinness has been struggling but they have also made positive inroads into the value segments.
On the premium side, being a sole distributor of Diageo’s spirits brand is expected to give them another option should the beer war become to intense to bear. Nevertheless, Guinness is being engulfed in this war and they seem to be losing.
Which firm will win the battle ?
Shareholders in the two firms will be watching their results carefully, to figure which of them comes out tops.
NB’ s profits for the three months ended March 2018 show revenue dropped from N91.2 billion in 2017 to N82.9 billion in 2018. Profit before tax also dropped from N17.4 billion in 2017 to N15.2 billion in 2018.
While Inter Brew’s latest results show the company made a loss before tax of N2.5 billion due to an increase in finance charges resulting from its merger. Revenue, however, increased from N9.4 billion in the prior year to N25.9 billion in the current year (this could be attributed to post-merger effects).
Guinness will release its annual report sometime in July, though interim results suggest things are improving.
More about the beer wars in the coming days.
NB shares closed at N124.40 in today’s trading session, down 4.60%.
International Breweries closed at N49.25, down 4.92% in today’s trading session