Following reports last month that Nigeria will soon increase excise duty rates for cigarettes and alcoholic beverages, Nigerian Breweries Plc has come up with a strategic plan aimed at cushioning the likely effects of the policy, albeit taking advantage of the opportunity it presents.
Jordi Borrut Bel, the Managing Director of Nigerian Breweries’ Plc, disclosed said plan to journalists during a press conference to announce the company’s Annual General Meeting. According to him, the company will increase its local content capacity, especially its sorghum value chain. This will, in turn, boost production capacity.
Nigerian Breweries Plc currently records about 50% local raw material sourcing capacity and is hoping to increase that to 60% by 2020.
Recall that the proposed excise duty increases will see increases in the prices of the products. Here are the details of the proposed increases: a stick of cigarette will attract a ₦1 specific rate per stick (₦20 per pack of 20 sticks) in 2018, a ₦2 specific rate per stick (₦40 per pack of 20 sticks) in 2019 and ₦2.90k specific rate per stick (₦58 per pack of 20 sticks) in 2020.The current ad valorem tax of 20% on cigarettes will, however, remain in place.
Beer & Stout would attract ₦0.30 per centilitre (Cl) in 2018 and ₦0.35 per Cl each in 2019 and 2020.
Wines would attract ₦1.25 per Cl in 2018 and ₦1.50 per Cl each in 2019 and 2020, while ₦1.50 per Cl was approved for Spirits in 2018, ₦1.75 per Cl in 2019 and ₦2.00 per Cl in 2020.
We remain committed to the market in the long term given that the fundamental of the beer market remains strong and attractive in both medium and long-term.
The brewed product market would remain competitive and consumers are expected to continue the down-trading as they seek for more affordable brands. Cost leadership and market leadership supported by innovation remain our key strategic pillars.-Jordi Borrut Bel
It should be noted that Nigerian Breweries’ financial report for the year ended December 2017 indicated it made ₦33bn in profits, a 16.3% increase from the ₦28bn the company made in the preceding year. In the same vein, the company’s revenue for the period climbed 9.8% to ₦344bn ($957m) from ₦313.7bn in 2016.
The company’s directors recommended a final dividend of ₦3.13.
Nigerian Breweries closed at ₦126.90 in today’s trading session on the NSE.