Nigerian Breweries plans to lessen impact of new excise tax on consumers through cost savings initiatives

Nigerian Breweries Plc, said it will lessen the impact of the new excise tax on tobacco and alcohol on consumers that is set to come into effect on 4th June by intensifying cost saving initiatives.

The brewer said it would seek to increase its local sourcing of raw materials as well as attempt to obtain further improvements in its sorghum value chain.

The firm added that it will consolidate its earnings through improved consumer value engagement, market penetration, stocking to hedge against market volatility as well as ensuring a balance in the management of input costs and price consumers pay for its products.

The maker of Star Lager said it is optimistic of achieving 60% local sourcing target by 2020, from the current level of 50%.

Speaking to the media ahead of its Annual General Meeting, the Managing Director of Nigerian Breweries Plc, Mr. Jordi Borrut Bel, said though the operating environment is forecasted to remain challenging in 2018, with continued down-trading by consumers, the company will continue to improve on its value extraction from cassava and other commodities used as raw materials.

The most recent financial results from the company for the full year 2017 showed a marked profit increase of 16.3% to N33bn ($91.6m) from N28bn in the previous year. Likewise, revenue for the period climbed 9.8% to N344bn ($957m) from N313.7bn in 2016.

Based on the company’s good performance, the directors recommended a final dividend of N25bn translating to N3.13 kobo per share, the most ever paid out by the company to shareholders.

“It is a sign of confidence for the future and strong balance sheet which indicates our ability to cash year on year,” the MD noted.

He pointed out that firm is well positioned to trade through difficult times by leveraging its innovative brands across different market segments.

“We remain committed to the market in the long term given that the fundamental of the beer market remains strong and attractive in the both medium and long term.

“The brewed product market would remain competitive and consumers are expected to continue the down-trading as they seek for more affordable brands. Cost leadership and market leadership supported by innovation remain our key strategic pillars”, he added.

Borrut Bel said that Star Lager, its flagship and first beer produced by the firm still remains Nigeria’s number one beer despite market dynamics.

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