Beer prices may rise as brewers battle N113bn H1 tax bill, higher energy costs

Nigerians may soon pay more for beer as rising tax bills and high energy costs put pressure on the country’s major breweries.

Nigerian Breweries Plc, Guinness Nigeria Plc and International Breweries Plc recorded a combined N112.87 billion in tax expenses in the first half (H1) of 2026, up from N71.39 billion in the same period of 2025. This represents an increase of about 58 per cent.

The increase came as the companies continued to battle high electricity, gas, diesel, transportation and other operating costs.

The rising expenses could make it harder for the brewers to continue absorbing higher production costs, raising the possibility that some of the burden could eventually be passed on to consumers through higher beer prices.

Financial results filed with the Nigerian Exchange Limited (NGX) showed that the three companies recorded stronger profit before tax (PBT) during the period. However, higher tax charges reduced the amount of profit left after tax.

Nigerian Breweries recorded the highest tax expense at N63.37 billion, compared with N43.83 billion in H1 2025.

Its profit before tax increased by 18.2 per cent year-on-year (y/y) to N156.33 billion, while profit after tax rose by only 5.1 per cent to N92.95 billion.

The company’s effective tax rate also increased to 40.5 per cent from 33.1 per cent a year earlier.

Guinness Nigeria recorded a tax expense of N13.03 billion, up from N7.32 billion in H1 2025.

Its profit before tax rose to N38.34 billion from N23.83 billion, while profit after tax increased to N25.30 billion from N16.51 billion.

Its effective tax rate rose to 34 per cent from 30.7 per cent.

International Breweries recorded a tax expense of N36.47 billion, compared with N20.24 billion in the previous year.

The company’s profit before tax increased to N74.79 billion from N61.53 billion.

However, it recorded a loss after tax of N38.31 billion, against a profit of N41.29 billion in H1 2025.

Its effective tax rate also climbed to 48.8 per cent from 32.9 per cent.

The figures show that while the breweries’ businesses performed better before tax, higher tax charges and other costs significantly affected their final earnings.

However, the N112.87 billion tax expense should not be taken to mean that the three companies paid N112.87 billion in cash to the Federal Government during the period.

Tax expense is an accounting figure that can include both current and deferred tax. For instance, Nigerian Breweries reported cash tax paid of N14.32 billion during the period, far below its N63.37 billion tax expense.

For consumers, the bigger concern may therefore be the combined effect of taxes and rising energy and distribution costs.

Brewing is a power-intensive business. Breweries need electricity, gas, diesel and other energy sources to keep their factories running. Higher energy prices therefore increase the cost of making beer and can also push up transportation and distribution costs.

The situation is coming at a difficult time for the industry as breweries try to recover sales volumes in a market where consumers are becoming increasingly sensitive to price increases.

Nigerian Breweries’ results illustrate the challenge. Its revenue increased by 8.9 per cent to N803.68 billion in H1 2026, while its gross and earnings before interest, tax, depreciation and amortisation (EBITDA) margins improved.

However, operating costs remained high, particularly selling and distribution expenses, as the company spent more on distribution, advertising and trade incentives to attract customers, support sales and protect its market share.

Analysts at Cordros Research said the breweries’ earnings remained exposed to several risks despite expectations of improved tax and foreign exchange conditions.

“However, elevated energy costs, which should keep distribution expenses under pressure, alongside sustained trade incentive spending to defend market share and a softer-than-expected volume recovery, remain the key risks to the breweries’ outlook,” the research firm said.

The warning suggests that beer prices could come under fresh pressure if energy and other operating costs remain high.

Higher beer prices could also put additional pressure on household budgets, particularly as consumers already face rising costs of food, transportation and other basic needs. Some consumers may respond by buying cheaper brands, reducing consumption or switching to alternatives.

Earlier in the year, the breweries announced price increases on some of their products, citing the prevailing economic conditions and rising costs of doing business.

The International Monetary Fund (IMF), in its Article IV assessment of Nigeria, had also warned that higher food and transport costs could weigh on economic activity and increase inflationary pressure.

However, the rising tax burden also highlights the Federal Government’s need to increase revenue to fund public services and infrastructure.

Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, has repeatedly argued that stronger government revenue would provide more money for infrastructure, electricity, transportation and other public services.

If such investments improve power supply, roads and other infrastructure, manufacturers could eventually benefit from lower operating costs.

For now, however, breweries are caught between rising costs and consumers who are becoming less able to absorb further price increases.

With taxes, energy, distribution and other expenses all putting pressure on their businesses, the key question is how much of the additional cost the companies can continue to absorb.

If the pressure persists, the cost could move down the supply chain, from breweries to distributors and retailers, and eventually reach consumers.

For beer drinkers, that could mean paying more for their favourite brands in the months ahead if breweries decide that absorbing the rising cost of taxes, energy and logistics is no longer sustainable.