Rising costs, weak demand squeeze Nigeria’s brewers

Despite a rebound in sales and easing foreign exchange pressures, Nigeria’s leading brewers, Nigerian Breweries Plc, International Breweries, and Guinness Nigeria Plc, continue to face profitability pressures as fragile consumer demand, surging operating costs, and non-recurring expenses weigh on bottom lines.

The country’s beer industry, long considered one of the more resilient consumer goods segments, is feeling the pinch from subdued household spending and cost inflation. While all three brewers reported year-on-year (y/y) revenue growth in nine months of the year, their earnings were hampered by restructuring expenses, administrative cost spikes, and consumer resistance to sustained price hikes.

Across bars, restaurants, and retailers, consumers have voiced frustration at beer prices that have nearly doubled over the past two years.

A bottle of premium lager now costs between N1,200 and N1,500 in many cities while a pack of Maltina cans now cost N2,750 and N3,200, representing a steep increase that has dampened consumption among middle- and low-income drinkers.

There are concerns as to how the incoming festive season (especially Christmas celebration) could pan out for the companies, restaurants and retailers. A Lagos based resident, Adam Tajudeen, a barber, told Daily Sun that he has now lowered his demand for beer due to the hike in pricing.

“I used to buy two bottles of Star after work but now I just take one or switch to a cheaper brand”, he said. A restaurant owner, popularly called Mummy Emeka in Ajegunle, lamented that consumers have reduced patronage, citing the weak macro-economy and price. “These days, I barely make money from selling beer to people who visit my shop. When I ask them the reason, they come up with “money no dey anywhere”.

This consumer pushback has slowed volume recovery across the sector. Despite better pricing and product-mix strategies, demand remains fragile as inflation and weak wage growth continue to erode disposable incomes.

Available statistics gleaned from the Nigerian Exchange Limited (NGX)’s website revealed that despite reporting a revenue of N1.04 trillion, Nigerian Breweries reported N85.51 billion loss in its Profit after Tax (PAT) for the period under review as against N149.50 billion in 2024. Analysing the results, the loss was due to the N6.08 billion impairment charge linked to the integration of Distell Wines and Spirits Nigeria Limited, a 56.7 per cent surge in operating expenses due to restructuring and administrative costs.

For its part, International Breweries’ profit fell to N57.83 billion from N112.81 billion recorded in 2024. Its revenue grew by 37.6 per cent from N343.45 billion in 2024 to N472.57 billion, however, growth was driven largely by improved margins rather than stronger sales as consumers remained highly price-sensitive, especially in the mass-market segment. Operating expenses climbed 33.9 per cent reflecting brand-building and promotional efforts to defend market share.

Guinness Nigeria delivered the strongest topline growth among the three, with revenue up 64.7 per cent to N98.07 billion and profit before tax surging to N15.86 billion from N3.82 billion a year ago. However, this growth came at a cost as operating expenses rose 72.1 per cent on the back of higher marketing, logistics, and wage costs.

Although the company benefited from lower finance costs and foreign exchange gains, its quarterly revenue fell by nearly 50 per cent quarter-on-quarter, underscoring how seasonal consumption and stiff competition continue to pressure volumes.

Commenting on the development, experts told Daily Sun that breweries’ operational improvements, including better cost control, local sourcing of inputs, and FX stability, are laying the groundwork for stronger earnings but added that profitability will remain fragile without a rebound in consumer spending power.

Head, Research at FSL Securities Limited, Chiazor Victor, said brewers are navigating a tricky balance between maintaining margins and keeping beer affordable. He said, “The festive season may bring a temporary lift in sales, but sustained recovery hinges on real income growth and lower cost inflation.”

Analysts at Cordros Research, said, “Looking ahead, brewers are expected to continue optimising costs, deepening local sourcing, and leveraging premium brands to drive profitability. However, with consumers growing increasingly price-conscious and competition intensifying, the sector’s recovery may remain slow and uneven”.

For now, the industry’s bitter brew of rising costs, one-off charges, and weak consumer demand means that, even amid revenue growth, Nigeria’s beer makers and drinkers are both paying a higher price.