As Africans, we are taught that names are powerful. Many people believe this, which explains why a lot of thinking goes into naming a child or a new business venture. While this is a good thing to do, it often becomes puzzling when names are the direct opposite of reality. Case in view is Champion Breweries Plc, a Nigerian brewer which keeps lagging behind in the midst of actual champions, thereby calling its rather powerful name into question. But this could change.
Champion Breweries Plc is Nairametrics’ company focus for the week. As always, we chose to profile the brewer mainly because it is little-known. There are many of such companies that are listed on the Nigerian Stock Exchange and ever so often, Nairametrics tries to shine the spotlight on them for the benefit of investors who may be looking for where to invest.
On that note, get to know all there is to know about Champions Breweries: its history, business model, target market, ownership structure, the influence of competitors, as well as financials.
About Champion Breweries Plc: a corporate overview
Initially known by the name South East Breweries Limited following its incorporation in 1974, the Uyo-based brewer has since gone through a series of corporate changes and rebranding. At some point, it became known as Cross River Breweries Limited, after which it transformed to Champion Breweries Limited. In 1992, the company became a public limited company in preparation to become a quoted company on the Nigerian bourse. The listing of the company’s shares on the NSE took place on September 1st, 1993.
According to information available on the Nigerian Stock Exchange’s website, Champions Breweries Plc has a total market capitalisation of about N10.8 billion. This is far less than the market caps of its major competitors. Similarly, its share price of N1.38 is far below that of its major competitors who shall be named shortly.
Champion Breweries’ business model
As a going concern, the brewer generates most of its revenue through the production and distribution of a range of alcoholic and non-alcoholic beverages. Asides producing its own products, Champion Breweries Plc also engages in contract brewing, which basically entails the provision of production and packaging services to other breweries for a fee. Two of the company’s only known brands are:
- Champion Lager Beer, and
- Champion Malta
The company’s target market
Just like every other brewer in Nigeria and beyond, Champion Breweries Plc targets beer lovers, as well as lovers of non-alcoholic beverages such as malt drinks. However, while the other leading Nigerian brewers tend to have wider target markets, Champion Breweries seems contented with focusing on consumers in the South-South and South-East parts of the country. This has been the case since its inception in the 1970s.
Champion Breweries’ ownership structure
After many corporate transformations and changes in ownership structure, the brewer is currently majority-owned by Raysun Nigeria Limited, a wholly-owned subsidiary of Heineken International BV. Information contained in the Nigerian brewer’s 2018 audited financial report indicates that Raysun Nigeria Limited owns a total of 4,729,434 units of shares, which represents 60.4% shareholding. The interesting thing is that Heineken International, besides owning Raysun Nigeria Limited, also has majority stake in one of Champion Breweries’ biggest competitors.
Anyway, a further breakdown of Champion Breweries Plc’s ownership structure indicates that the Akwa Ibom State Government holds some 10% shareholding, while an Assets Management nominee holds 12.3%. Other shareholders comprise mostly retail investors, who own the remaining 17.3% shareholding.
A quick look at the company’s top executives
- Dr. Elijah Akpan: Chairman
- Mr. Patrick Ejidoh: Managing Director
- Mr. Hendrik van Rooijen
- Mr. Marinus Gabriels
- Mr. Samson Aigbedo
- Mrs. Helen Umanah
- Mr. Thompson Owoka
- Alhaji Shuaibu Ottan
- Mr. Samuel Onukwue
Facing the competitors
Nigerians are famous for their love for all things alcohol, especially beer. This explains the availability of quite a handful of brewers across the country. Five of these brewers are listed on the country’s stock market and they include Nigerian Breweries Plc, Guinness Nigeria Plc, International Breweries Plc, Golden Guinea Breweries Plc, and of course, Champion Breweries Plc.
The scorecard for the companies’ half-year 2019 performances shows that Nigerian Breweries generated the biggest revenue of N170.1 billion, followed by a profit after tax of N13.3 billion. Guinness Nigeria Plc, whose full-year normally ends June 30th of every year due to its unique accounting process, recorded revenue of N67.7 billion. The company’s profit after tax for the period stood at N1.7 billion. Meanwhile, International Breweries Plc reported revenue of N68.6 billion for the period under review but ran at a loss of N6.8 billion. Lastly, Champion Breweries Plc reported revenue of N1.6 billion and a profit after tax of N99.1 million.
Making sense of the situation
It is important to reiterate that Champion Breweries Plc is a traditionally small company which has always focused on the South East region. The company’s decision to remain small could be a strategic move by Heineken International to ensure that it does not unnecessarily compete with Nigerian Breweries. This could explain why it has limited product lines, whilst focusing much of its energy on contract production for Nigerian Breweries.
Should Nigerian Breweries buy Champion Breweries Plc?
This could make sense, considering that both companies are already owned by the same entity – Heineken. Moreover, Champion Breweries is already in charge of producing a considerable amount of NB’s products. But while this may seem like a possible option, it is important to note that Champion Breweries’ products have achieved brand loyalty in the South East region where the company has operated for over forty years. Maintaining this brand loyalty is important no matter how small it may seem.
More so, part of Heineken International’s strategic move may be to allow Champion Breweries keep producing its cheaper beer and malt brands as a way of checkmating competition from the likes of Guinness Nigeria Plc and International Breweries Plc. After all, as we’ve noted earlier, people in the South East are already familiar with Champion Lager Beer and Champion Malt. It would be unwise to halt its production whilst possibly giving competitors the chance to take over that market share.