Nigerian Breweries targets 60% local sourcing of raw materials by 2018, says MD

Mr. Nicolaas-Vervelde

Nigerian Breweries Plc, said it is targeting 60% of local sourcing of raw materials by 2018. The brewer of Star Lager, Gulder Lager and Legend Extra Stout, among others said it currently sources 47.4% of its raw materials locally. It is projecting that by 2018, that number would go up to 60%, and then 99% by 2020, with the commitment of Heineken, its parent company.

Speaking to the press, the Managing Director of Nigerian Breweries, Mr. Nicolaas Vervelde, said the company is making progress with its partners – International Fertilizer development Centre (IFDC), and Psaltry International, a local processing company, on value extraction from cassava.

Vervelde said Nigerian Breweries is also making progress in the development of new hybrid sorghum varieties with the potential of increasing yield for sorghum farmers as well as improving the quality of sorghum malt, which is an ingredient used in brewing beer.

Mr. Vervelde added that while the country was experiencing economic hardship in the form of lower oil price, the main source of revenue for the government, this ultimately is affecting payment of salaries for civil servants, both on the state and local level. The MD noted that anything the government can do to improve revenue will also relieve the forex situation, a major concern for the brewer.

He further said that Nigerian Breweries has developed a set of competing portfolio to address the needs of a diverse consumer base. The company currently has 20 brands and all have segments, he noted. And with the company’s vast knowledge of the Nigerian marketplace for 70 years, it has the enviable position and market strength to weather the competition.

The MD noted that Nigerian Breweries has been involved in backward integration as far back as the 1980s, during the Structural Adjustment Programmes (SAP). At the time, forex were not available to source for raw materials. Nigerian Breweries, with support of technology from its parent company, Heineken, was able to start brewing beer with corn.

The MD adds that since 2006, the company has been able to invest in two varieties of sorghums and is now harvesting four tonnes per hectare from one tone per hectare. As a result, Nigerian Breweries has created jobs for 250,000 farmers through its investments in sorghums and cassava farming. The company’s plan for the future is to make the products (sorghums and cassava) available commercially. The company initiated plans by signing a Memorandum of Understanding with the Federal Ministry of Agriculture to upscale the project for two to three years and then make it commercially available.

Mr. Vervelde, said Nigerian Breweries has been investing in backward integration of sorghums and cassava for over five years.

However, he decried the low per capita consumption of beer in the country. He said while Nigeria has a large population of over 170 million people, it only consumes 11-litres per person, while other countries with large population have far higher consumption per capita. He cites countries like Brazil with 200 million in population and a per capita consumption of 70-litres. Others are Russia, 64-litres; Mexico, 60-litres; South Africa, 60-litres; Burundi, 40-litres; Cameroun, 40-litres; and Sub-Saharan Africa, 17-litres per head. He said the last time Nigeria had high per capita consumption was 1984, and it was 17-litres per person.

The MD of Nigerian Breweries said that there are many ways companies like theirs can increase per capita consumption of beer. One way is to work on the route-to-market; by making sure the brands are available, not only in the urban centres, but also in the rural areas. Another way is to address all consumer needs, including pricing. He noted that over the last few years, per capita consumption of beer in the country has been declining because of decrease in wages mainly due to inflation and devaluation of the naira.

He said that the performance of the beer industry in the last year has been a reflection of the economy. He noted that the industry has been undergoing slow growth for the last four years with only 1% growth in 2015, compared to 9% to 10% recorded in the years before 2010.

He said that the slight growth recorded by industry players has been in product innovation and expansion of beer plants driven by acquisition. He added that Nigerian Breweries alone has 20 products category, 11 beer plants and two malting plants in Aba and Kaduna.

Mr. Vervelde said that Nigerian Breweries has contributed in many ways to the socioeconomic development of the country. He cites as example, the N16bn paid by the company as taxes into Federal Government coffers in 2015 alone. In addition, the company disbursed N38bn to shareholders in 2015. Employment-wise, the brewer has 4,000 Nigerians on its payroll across the country, while 280,000 have been indirectly employed by transporters, distributors and other ancillary businesses. The company also spent N130m on Corporate Social Responsibility projects in 2015.

One Response to Nigerian Breweries targets 60% local sourcing of raw materials by 2018, says MD

  1. Joe says:

    The Nigeria brewery MD Vervelde should invest into Agriculture as diversification.Nigeria still import rice wheat tomatoes paste,and many other food items. Nigeria priority no longer for beer but that not to say you cannot make profit unfortunately not what used to be and with the huge population you can never go wrong to invest massively in agriculture and food processing. Remember food comes before people think of beer It is a big mistake when comparing huge market share opportunity to any other African countries,and any company in Africa without presence in Nigeria not yet in Africa.

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