By Chinwendu Obienyi
Consumers of alcoholic beverages in Nigeria drank beer worth N517.29 billion between January and June 2023, data obtained by Saturday Sun from companies which filed their financial results with the Nigerian Exchange Limited (NGX) revealed.
This is despite the soaring inflation and forex scarcity currently bedevilling the nation’s economy. As a result, beer-producing companies have been grappling with shrinking margins which in turn mounted pressures on their profitability due to the liberalisation of the forex market, a situation that resulted in a sharp depreciation of the Naira. Some of the companies under the watch of Saturday Sun’s watch include; Champion Breweries Plc, Guinness Plc, International Breweries Plc and Nigerian Breweries Plc. For instance, Champion Breweries recorded a decline in its revenue, dropping from N6.58 billion to N5.71 billion in the period under review while Guinness Plc’s revenue grew to N118.45 billion from N109.12 billion in 2022. International Breweries Plc’s revenue increased by 4.2 per cent from N111.40 billion to N116.13 billion while Nigerian Breweries Plc grew its revenue from N274.03 billion in 2022 to N277 billion in 2023. This meant that the companies’ revenues grew to N517.29 billion during the period under review.
However, the turnover grossed by the four largest brewer in the country fell by 13.66 per cent when compared to the N599.11 billion generated during the corresponding period in 2022. Similarly, the net profit of the companies suffered declines owing to FX woes and inflation.
Commenting on these results, analysts noted that companies had faced a challenging start to the year. They added that the companies experienced cost pressures stemming from the devaluation of the Naira and higher finance costs.
Speaking on the results, the Chief Executive Officer, Guinness Nigeria Plc, John Musunga, said that the earnings and revenue growth resulted from strategic pricing and successfully deploying product mix across categories to counter cost inflation, and an optimised route-to-consumer approach that improved outlet coverage and the use of its B2B platform to improve distribution efficiency.
Musunga, however, said that the increase in the cost of sales for the company outpaced revenue growth primarily due to the prevailing macroeconomic headwinds, specifically inflation, currency depreciation and the illiquidity of the FX market.
Corroborating Musunga, the Managing Director, International Breweries Plc, Carlos Coutino, added that the increase in excise duty hurt the company’s earnings. According to him, there is a gloomy outlook for the business sector following a significant reduction in consumer disposable income. He called on the government to put out a positive policy to mitigate the excessive increase and double taxation and to give the industry a three to six months moratorium to adjust to new policies.
The Company Secretary, Nigerian Breweries Plc, Uaboi Agbebaku, noted that although the recent policy reforms are having a short-term impact on businesses and consumers, it is beneficial to the long-term growth prospects of the country and the company.