- Nigerian market insatiable – Brewers
- Turnover has always increased during downturns – Operators
Nigerians spent over half a trillion naira on the consumption of alcohol between 2015 and 2017, The Point’s investigations have revealed.
This was in spite of the worst recession in over two decades, witnessed by the country, between June 2016 and September 2017.
Our correspondent’s assessment of the alcohol segment of the industrial sector, based on figures obtained from organisers of the Nigeria International Wine & Spirit Fair, Sprongs Creations, showed that between 2015 and 2017, sales of alcoholic beverages added value with a purchase rate of over N500 billion.
The consumption worth in the industry, which is experiencing a steady influx of foreign brands fighting to take their share of the market, increased from N450 billion as at the end of 2015, to about N950 billion, in 2017.
While the figure for the consumption of wine and spirit in the country stood at over N144 billion, the beer segment stood at over N366 billion, within the period.
Analysis of figures obtained from the organisers of the NIWSF, revealed that the consumption rate of wine and spirit in the country was valued at over $500 million, based on importation value.
A recent report by the United States Department of Agriculture, which our correspondent obtained, confirmed these figures, revealing also that, within the alcohol market, which is worth about $7 billion, the beer segment led the purchase chart with about 55 per cent. Spirits followed with about 30 per cent, and wine, 15 per cent.
The report also found that about 80 per cent of the wine and spirits consumed in Nigeria were locally made, while their imported counterparts accounted for only 20 per cent.
These fresh figures may have thus put a lie to the common impression that most of the breweries in the country are on the verge of closing shop, owing to a combination of factors affecting production and sales.
The breweries have often cited problems militating against their trade to include irregular power supply, foreign exchange crisis, harsh operating conditions, deplorable road, and policy reversal.
SCORE CARDS OF MAJOR LOCAL BRANDS
Aside from the foreign brands, their local counterparts are also smiling to the banks, as most of them declared impressive revenue at the end of their 2017 financial year.
Guinness
Guinness Nigeria Plc posted a 30 per cent revenue growth at the end of the first quarter, which ended September 30, 2017.
The company’s revenue increased from N23.02 billion as at the end of the comparative period in 2016 to N29.9 billion in 2017. Its gross profit during the period under review also grew by 24 per cent as against a pre-tax loss profit of N2.12 billion recorded in the comparative period of 2016.
Without mincing words, the Managing Director of the company, Mr. Peter Ndegwa, had attributed the development to the reflected continued growth within the spirits (hot drinks) business and benefit of an expanding portfolio against the backdrop of lapping the inventory reduction in 2016.
He said, “We will continue to focus on productivity and expansion of our portfolio with the introduction of new brands in the hot drinks segment.
“Our spending on Advertising and Promotion is critical to driving growth, not just for our innovation brands, but also for our core brands like Guinness.”
NB
Despite the fact that the Nigerian Breweries increased the prices of its products across board due to the rising inflation on its gross margin, the company raked in revenue worth N344.6 billion at the end of 2017. A source in the company attributed the growth to the volume of sales recorded for stout and largely ‘Lager’.
He said, “With the tight operating environment, we are optimistic that our revenue will grow by 9.4 per cent, from N344.6 billion to N377 billion. In 2018, we expect improvement in volumes of our ‘Lager’ as consumer purchasing power keeps increasing over the years.
“We will intensify efforts to cement our market leadership across key brands such as Heineken and Star while ensuring competitiveness of its mainstream products. Our new premium Lager Beer brand, Stella Lager, which was launched in December 2017, will contribute to our improved revenue in 2018.”
International Breweries
The 2017 annual result of International Breweries, brewer of Trophy Lager Beer, was, indeed, an impressive one.
The company’s 2016/2017 financial year, which ended on 31st March 2017, showed a 41 per cent growth in revenue, from N23.3 billion in 2015/2016, to N32.7billion.
Findings revealed that its brand, Trophy Lager, popularly called ‘Honourable’ contributed over 80 per cent of the 42 per cent rise witnessed in the gross profit of the firm.
The parent company, Anheuser-Busch InBev, admitted that the increased purchase of the brand boosted growth as it further attributed the improvement to increased capacity and further market penetration.
CHANGE IN CONSUMPTION PATTERN
A brand expert, Dr. Tony Onyenakeya, explained that consumers had changed their pattern of consumption, a development he attributed to the growth witnessed in the last two years.
According to him, consumers in the middle-class and the youth have adopted the consumption patterns similar to Western countries and are increasingly developing preferences for premium brands.
Onyenakeya, who is the Chief Operating Officer, Brandz Link, a public relations and brand firm, said, “The nation’s increasing number of female alcohol drinkers, especially in Lagos, Port Harcourt, Rivers State, and the Federal Capital Territory, Abuja, led to the notable switch from consumption of relatively inexpensive local spirits, some of which are sub-standard, to higher priced brands.”
He added that the European Union and South Africa were the leading suppliers to the market, while other countries, such as Russia, Mexico, United States, Brazil, and Canada, among others, also supplied to the nation’s traditional open markets, grocery stores and malls.
NIGERIAN MARKET INSATIABLE – BREWERS
Operators in the Nigerian alcohol industry have, however, admitted that they have not met the demands of consumers.
The Group Managing Director, Kasapreko Company limited, a Ghanaian based manufacturer of Alomo Bitters and other alcoholic herbal drinks, Dr. Kwabena Adjei, told our correspondent that the Nigerian market controlled over 60 per cent of its consumers.
He said, “We want to make a strong footprint in Nigeria and that is the reason Kasapreko wants to build a N10 billion factory in the country.
The consumption worth in the industry, which is experiencing a steady influx of foreign brands fighting to take their share of the market, increased from N450 billion as at the end of 2015, to about N950 billion, in 2017. While the figure for the consumption of wine and spirit in the country stood at over N144 billion, the beer segment stood at over N366 billion, within the period
“To position Alomo Bitters, we employed a special branding myth that was laced around enhancement of sexual prowess. Within a short time, this, and the fact that it was easily affordable, made the sales figure of the drink to go up.”
The Brand and Country Manager, Louis Roederer, an international champagne, Ms. Frances Lawrence, said the company was excited about its Nigerian market as she disclosed that it was a market no serious international brand would want to joke with.
She said, “We are very glad to be associated with Nigeria as our brand takes special interest in West Africa, where there has been less focus on quality wine and spirit.
“For us at Louis Roederer, it is important to associate our brand with the country and events that promote wine and spirit culture and lifestyle. As a global brand, we are proud to say that we only associate with the very best and we can say, categorically, that Nigeria offers such
platform.”
FIRST CHAMPAGNE FACTORY TO EMERGE
The Managing Director, Spronks Creations, Mrs. Aderonke Sobodu, told our correspondent that over 30 wine and spirit exhibitors, drawn from over 10 countries, including Spain, New Zealand, Canada, South Africa, United States of America, Argentina, Chile, Italy and France attended the annual NIWSF.
She said, “The growth and acceptance of wine and spirit into our social lifestyle has made the country one of the fast emerging markets in the world, which in turn offers great opportunity for tourism, trade and commerce. This also created the need to expose indigenous wine and spirit producers to the global trade environment with Nigeria ranking as a fast growing market.
“The NIWSF team, in partnership with the International Oenologists, is exploring the possibility of growing and producing the first commercial wine range in West Africa. Obudu Plateau, found on the Oshie Ridge of the Sankwala Mountain range, has been identified as a potential location to explore wine production, based on the landscape and altitude of this region.”
The Head, Market Development, German Engineering Federation, organisers of Drinktec, another wine and spirit fair, Mrs. Martina Claus, said that despite the economic recession that struck in 2016/2017, Nigeria was still rated the highest consumer of Champagne in the world.
The nation’s increasing number of female alcohol drinkers, especially in Lagos, Port Harcourt, Rivers State, and the Federal Capital Territory, Abuja, led to the notable switch from consumption of relatively inexpensive local spirits, some of which are sub-standard, to higher priced brands
She added that the country was similarly ranked among the top 10 markets for alcoholic drinks; 147th in the consumption of milk products; and 101 in the edible oils market.
“It is only the alcohol fair that attracts over 66,000 trade visitors from Germany and around the world in Nigeria. Drinktec brings together companies, large and small, and attracts visitors from all business areas,” Claus said.
Contrary to the expectations of some observers that the consumption of alcohol, like many other products, should drop during recession, some club owners have said that the volume of both local and foreign brands, sold during the last recession in Nigeria, negates such speculation.
According to the publicist of the Chairman, Quilox Club, the acclaimed biggest nightclub in Nigeria, Mr. Akinwole Omole, there are three products whose sales are not affected by recession. They are: alcohol, coffee and cigarette.
He said, “Alcohol is the soul of night club business and Quilox has never recorded a loss during recession. The club is shut during Ramadan and re-opened after the fasting and our turnover has always increased when there is
economy lull.
“Our sales increased during the last recession because social drinkers have become loyal to elite products, and less affluent customers aspire to them. Most of our consumers are so addicted to premium brands even in recession.”
The Public Relations Consultant to Bacardi Limited in Nigeria, Ms. Lola Abebayo, explained that Nigeria “is a party nation as people’s spendings during weddings, funeral, or graduation don’t drop even during recession.”
She said, “I have observed that even in hard times, Nigerian drinkers can have expensive tastes. The vast majority of orders are for premium brands. Top sellers include Moet champagne, Hennessy cognac and Johnny Walker whiskey, as people purchase them for over $100 per bottle.
“In a country where over 60 per cent of the population live in extreme poverty, an average wedding brought in over $22,000 for our brand every month in 2016.”