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Companies

How technology is disrupting e-commerce, FMCG distribution

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How technology is disrupting e-commerce, FMCG distribution

Disruption has transformed from being a business cliché to a fearful reality, especially if businesses intend to be relevant in the coming years. 

Disruptions have changed the banking sector, the telecom sector and recently, the ecommerce sector. 

A little over 20 years ago, Nigerians spent an average of one hour in a bank branch to withdraw as little as N2,000. Today, you could stay away from the bank and carry out transactions fully with your phone. 

In 1998, it took 34 days to acquire a NITEL (Nigeria Telecoms) landline phone at the cost of N120,000, an equivalent of $5,481 at the exchange rate of N21.89 per dollar. Now, 21 years down the lane, a smart landline phone costs less than N10,000. Furthermore, this can be set up within 10 minutes! 

In 2015, an obscure Yudala in the thick of recession changed the narrative in the Nigerian e-commerce space. Yudala became the first composite e-commerce (offline & online) company shaking the foundations of the big two. 

In the Fast Moving Consumer Group (FMCG) distribution space, TDiLife, an organization headquartered in Lagos came with a mission to progressively redefine consumer and lifestyle products distribution in Nigeria and Africa. The company employed technology in creating an efficient supply chain that delivers value to customers and consumers without stories. Within two years of commencement, the company has redefined FMCG distribution. 

This was the disruption required to transform FMCG distribution and create a distribution company for the future. 

Today, large Original Product Manufacturers (OPMs) can rely on distribution partners with capacity in the following: 

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  • Logistics: trucks, vans and partnership with strong delivery companies 
  • Technology: ERP, contact center, social media 
  • Skilled staff in the areas of audit, accounts, inventory, management and conducive and digitalized warehouse. 
  • Affiliation with modern online banking facilities to minimize exposure to fraud and create a secure financial management platform. 
  • Consultancy in the area of route-to-market.  
  • Efficient inventory management strategy FIFO (First in first out) and SISO (Sale in sale out)  
  • Integrated inventory control and management strategies in a largely transactional ecosystem.  

The challenge today still remains the inability of OPMs to appreciate these investments and compensate for these investments in the FMCG distribution landscape. 

The future is here already, regardless… 

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To be continued… 

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"NM Partners" represent articles published in partnerships with Corporate Organisations, Government and Non-Governmental Institutions, and other stakeholders seeking to publish content on Nairametrics. Content includes Press Releases, Targeted content, and other forms of corporate communications targeted at our readers. Some of these content are paid for.

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Companies

COVID-19, VAT, FX scarcity adversely impacted our operations in 2020 – Nigerian Breweries boss says

NB Plc’s operations in 2020 were adversely impacted by the COVID-19 pandemic, VAT increase and FX devaluation.

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Heineken scoops more Nigerian Breweries shares in insider disclosure

The management of Nigeria’s leading brewer, Nigerian Breweries Plc has revealed that its operations in 2020 were adversely impacted by the COVID-19 pandemic, VAT increase, FX devaluation and scarcity of foreign exchange.

This statement was made by the Managing Director of Nigerian Breweries, Mr Jordi Borrut Bel, at the company’s pre-AGM media briefing for the financial year-end 2020, which held in Lagos this week.

He noted that the increase in the brewer’s cost in 2020 was due to the COVID-19 pandemic which disrupted the company’s operations, as well as the increase in VAT, devaluation and FX scarcity which has put pressure on input cost.

READ: Alcoholic beverage makers on NSE lose a total N27.7 billion in a single day

The Nigerian Breweries boss explained further that the increase in cost could not be fully attributed to currency devaluation and foreign exchange scarcity.

He explained that the increase in costs of goods sold, as reported in its audited financial results, could also be linked to the increase in the volume of goods sold, as the company’s sales volume in 2020 increased by almost the same percentage as the cost of goods sold.

To deal with this challenge going forward, he revealed that the company is focused on the supply chain, and will continue to seek out ways to mitigate any of the price increases coming from FX scarcity.

READ: Brewery sector: A quarter to forget

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The company’s profitability in question?

An analysis of the company’s result revealed that despite the 4.3% increase in net revenue from N323.00 billion recorded in 2019, to a total of N337.01 billion in 2020, the company’s profit declined significantly by 53.3% to N7.53 billion.

Speaking on this, Jordi Borrut in his statement at the press briefing noted that the brewer’s business performance in 2020 was quite impressive especially in the face of the COVID-19 pandemic and economic recession. Despite these challenges, the company maintained a strong and healthy balance sheet.

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There was a slight reduction in profitability but compared to the previous year, the business witnessed an improved growth in revenue. The significance of this is that the business became more stable and healthier,” he said.

READ: Nigeria’s triangular beer war on the rise with the arrival of Budweiser

What you should know

  • Nigerian breweries, being the largest brewer in the country, maintained its stance in terms of generating profits year-on-year. The company emerged as the only brewer to record a profit of N7.37 billion from its operations in 2020, 54.3% lower than 2019 figures (N16.1 billion).
  • From this, the leading brewer was able to pay shareholders a total dividend of N7.5 billion, translating to a dividend of 94 kobos per share – a dividend payout in which exceeds 100%.
  • While Guinness and International Breweries made a loss of N12.6 billion and N24.9 billion respectively, this reality impacted their ability to pay their shareholders dividends in 2020.

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Business News

Highest paid Nigerian bank MD/CEOs of 2020

Bank MD/CEOs in Nigeria earned a combined N1.5 billion in salaries in 2020.

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The banking sector, especially commercial banks, is one of the most profitable sectors of the Nigerian Economy churning out profits of close to a trillion in 2020 alone. They are also one of the highest employers of labours in the country employing over 93,000 Nigerians.

Sitting at the helm of affairs is the Chief Executive/Managing Director, the highest-ranking executive in the organization saddled with the responsibility of making the best corporate decisions, oversight of the execution of the organisation’s corporate strategies and most importantly increasing the shareholders’ return. The buck basically stops on their table.

Thus, these enormous responsibilities also come with a considerable executive compensation for their service making them ostensibly the highest-ranking staff of the bank.

READ: Jim Ovia: From a clerk to founder of Nigeria’s most profitable bank

In typical Nairametrics fashion, we bring to you a list of the highest-ranking bank CEOs for 2020 based on their executive compensation (exec comps). The bank MD/CEOs under our review earned over N1.5 billion in salaries in 2020.

The data was sourced from the published audited accounts of the bank and verified by Nairametrics Research.

 

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