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Home Business News

This is how Nigerian Breweries intends to survive the Nigerian beer war

Fikayo Owoeye by Fikayo Owoeye
September 12, 2018
in Business News, Company News, Spotlight
Beta Glass Plc

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The management of Nigerian Breweries Plc has revealed its strategic plans aimed at consolidating its market share in the country.

At a recent press conference, the company announced plans to consolidate on its position as the race in the beer market becomes stiffer in the face of intense competition, increasing cost inflation, and weak consumer spending.

Plans for its Premium lager segment

The company revealed plans to grow volumes in the premium lager segment using sales push of recently-launched Tiger Lager. The bottle will be offered in 450ML sizes (in contrast to the commonly available 600ML bottles) at pocket-friendly prices.

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The Tiger brand which was previously available in select regions of the country will now be introduced nationwide.

Recall that NB effectively owns two key brands in the premium lager segment (Heineken and Tiger) and will be facing tough competition from International Brewery’s recently-launched global brand, Budweiser, while Guinness Nigeria has Harp in this segment.

The company also announced readiness to consolidate on its position in value lager segment (now mainstream in Nigeria). Value brands account for 65% of the larger market with NB leading this segment.

That said, International Breweries, recently commissioned a $250 million plant in Sagamu, Ogun-State and will be competing with Nigerian Breweries in this space and pushing more volumes of Trophy and Hero Lager into Nigerian Brewery’s important markets in the southwest and southeast.

Another big player in the market, Guinness also launched value lager the Royal Kingdom in May but for now, has only made it available in the southeast. Guinness, however, plans to push more volumes of this brand, following which the larger space will be further crowded. Nigerian Brewery’s market share in this space is threatened.

The stout segment

Nigerian Brewery management continues to maintain some level of presence in the stout segment with 20% of the market. The company says it expects to grow volumes of its stout brand in the country. The stout segment is dominated by Guinness with its Guinness Stout brand and it is guiding its stout market share aggressively.

The Malt segment

Nigeria Brewery’s malt segment has suffered in recent years, but the brewer still leads this space with its Maltina and Amstel Malta brands. The management stated that it will leverage on the increasing health consciousness (i.e the shift away from sugary carbonated drinks) of a cross-section of Nigerian consumers.

Guinness is already gaining entry into this segment with its Origin Zero brand. Indeed, Guinness has been seeing volume growth in this brand. Guinness remains the only ‘king’ in the Spirit segment. Other brewers are not ready to enter this segment.

Likely down-side risks

According to the management, about 60% of inputs are sourced locally thereby protecting it from FX-related shocks. There are also strong indications that pastoral conflicts around where sorghum (a key input requirement) is produced and increased demand from brewers are translating to a higher cost of sourcing the commodity.

On the excise tax increase, the management expressed plans to absorb this increase in a bid to remain competitive.

Nigerian Breweries Plc stock closed at 90.00 during the trading session yesterday at the Nigerian Stock Exchange, with a one year return down by 49.64%.

Nigerian Breweries was incorporated in 1946. Its first beer, STAR Lager, rolled off the bottling lines of its Lagos Brewery in June 1949. It continues to serve the Nigerian market and exports to other parts of West Africa.

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Tags: Guinness Nigeria PlcInternational Breweries PlcNigerian Breweries Plc

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