Nigerian Breweries – Financial Market Forum Wrap-Up

Nigerian Breweries Plc, the nation’s largest brewer held its ‘2017 Financial Market Forum’ on 14th September 2017 at the company’s Iganmu-Lagos facility, where the new CEO Johan Doyer and Finance Director, Mark Rutten held a briefing of the company’s business and gave analysts a tour of the Iganmu plant.

The company posted a 15% revenue growth in the first-half of 2017, driven partly by earlier price increases. Beer volumes in the period declined mid-single digit. The brewer said it has implemented further marginal price increases in the N220 to N230 price range for select brands at the start of the third quarter of 2017 with the aim boosting margins amidst local input cost pressures.

Volumes and market share remain under pressure, the company said, a trend that began two years ago as consumers shifted to value brands and participated less in the stout and malt segments.

The company attributed the increase in ‘Other Income’ to N1.6bn, from N140m in its half-year results to insurance compensation claims received from a fire incident in December at its Lagos facility in the empty crates storage section.

The brewer said that value beer is driving growth and it points out it has no plans to delve into the spirits business. The company notes that Goldberg Lager and Life Continental beer seem to be driving volume growth. Premium brands such as Star Lager, Gulder as well as Stout and the malt category have seen volume declines.

The brewing giant said it has no plans to introduce any new beer brands into its faster growing value segment given that it has a strong representation in that category. It notes that it is “well placed to capture growth when the market recovers”.

The brewer said it continues to innovate with the recent launch of ‘Ace Desire Zobo’, a ready-to-drink (RTD) hibiscus flavoured drink targeting health conscious consumers. The new drink has an ABV of 5.5% and is packaged in 33cl glass bottles.

Iganmu-Lagos Plant

The Iganmu-Lagos brewery is the company’s largest facility with an installed capacity of 3.5 million hectoliters per year. The company has 10 operational plants around the country. The Iganmu-Lagos brewery was the first plant built by the company in 1949 and has undergone extensive renovations over the years to improve efficiency.

The Lagos brewery produces 13 brands from the brewer’s 19 product portfolio and about 30 SKUs. The brands are produced under a strictly monitored automated procedure. The company’s premium brand, Heineken is produced with special and distinct equipment. Head Brewer, Chinedu Uwajeh, said that one of the most crucial points in the value chain is inspecting the raw materials brought from the farms – Sorghum, Barley and Hops. The company currently sources 58% of its ingredients locally with a target of 60% by 2020.

The 58% ratio does not include packaging materials which is entirely sourced locally. The firm said it continues to invest in its raw materials programmes, working with over 250,000 farmers and inputs like sorghum, cassava and prospectively sugar.

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