With the Nigerian economy facing what could be considered one of the toughest periods in recent times, coupled with declining disposable income by consumers, businesses are devising innovative ways to remain afloat and strong. In this report, Olawale Adebiyi examines the recent move by Nigerian Breweries Plc to acquire Distell Nigeria as part of its recovery growth plan amidst a difficult business environment.
In the past, the manufacturing sector in Nigeria was known to be a major source of revenue for the Nigerian economy contributing significantly to the Gross Domestic Product. But things appear to have changed with the sector gasping for breath owing to a myriad of challenges confronting it. The brewery industry, which forms a critical part of the manufacturing sector is not removed from these challenges. Though, despite the tough terrain, the industry, over the last few years, has continued to show its resilience.
However, the last few years have been particularly challenging for many businesses including brewery companies in Nigeria owing to skyrocketing inflation and declining disposable income. As a response to these challenges, brewery companies are coming up with different initiatives to weather the storm. Already, things are happening fast in the country’s beer market as each of the players is daily looking for an opportunity to have a competitive advantage over the other.
While the likes of Guinness Nigeria and International Breweries Plc have implemented various strategies like new ownership, to maintain their share in the category, Nigerian Breweries Plc is consolidating its leadership in the market by expanding into other frontiers.
Just recently, Nigerian Breweries Plc ventured into the Wine and Spirit market through the acquisition of an 80% stake in Distell Wines and Spirits Nigeria. Distell Nigeria, a subsidiary of Distell International Limited, is involved in the local production of wines and ciders and the importation of wines, spirits, and flavored alcoholic beverages from Distell Group in South Africa. Distel Nigeria currently boasts a rich portfolio that includes Amarula, JC Leroux, Nederburg, Drostdy Haf, 4th Street, Bain’s, Knights, Chamdor, Hunters, and Savanna.
According to a notification of proposal signed and sent to the Nigerian Exchange Limited by the Company Secretary, NB Plc, Uaboi Agbebaku, the company received the offer from Heineken Beverages (Holdings) Limited to buy or acquire 80% majority interests in Distell Wines & Spirits Nigeria Limited (“Distell Nigeria”).
It would be recalled that, at an Extraordinary General Meeting held in December 2023, the board sought ratification and approval for an 80% acquisition of Distell Nigeria, which was approved by the shareholders. Having received the buy-in of one of the business stakeholders, it took the final approval of South Africa Reserve Bank for the transaction to be eventually signed off.
According to a press statement issued by the management of NB Plc, the completion of the transaction follows the approval of the South Africa Reserve Bank (SARB) for the acquisition by Nigerian Breweries Plc, of the shares of the South African entity, Distell International Limited (now known as Heineken Beverages Holdings Limited) in Distell Nigeria, as well as the import business of Distell International Limited in Nigeria.
Notwithstanding the attendant delay in the completion of the transaction, the bold move by Nigerian Breweries Plc has been described by stakeholders as a serious game changer that would not only improve the fortunes of the company but also help stimulate the economy.
Speaking on the development, the Chief Executive Officer, Nigerian Breweries Plc, Hans Essaadi explained that the acquisition is a big move aimed at improving the performance of the company and meeting the yearning of its consumers. Essaadi cited that the acquisition is in line with the strategic objective of the company to expand its current product offerings beyond beer . It embodies the company’s commitment to cater to the diverse needs of consumers with the acquisition of Distell Nigeria
“This acquisition is part of efforts to provide access to a complementary multi-category portfolio of fast-growing brands of wines and spirits market segment and capture significant growth opportunities in the wines and spirits segment of the brewing industry. We are excited to have the process completed and can’t wait to see how this transforms our business” he said.
Also speaking, the Marketing Director, NB Plc, Emmanuel Oriakhi stated that the acquisition underscores the enduring commitment of the company to satisfy the yearnings of its teeming consumers who constantly crave for different options.
“We are quite excited to make a foray into the business of wine and spirits. We are quite optimistic that those who are in love with our brands will find a reason to do business with us. The Wine and spirit market enjoys a significant portion of consumers in the market and we are ready to take advantage of this opportunity by taking the brands to their doorstep,” Oriakhi said.
In his remarks, the National Coordinator, the Progressive Shareholders Association of Nigeria, Boniface Okezie described the acquisition as an important milestone that would impact positively the fortune of the company. While applauding the management team for making such a business decision, Okezie stated that shareholders would continue to support any action that would take the business forward.
Like the NB stakeholders, the management and staff of Distell Nigeria are already excited about the new beginning that this acquisition offers.
Speaking on the acquisition, the Managing Director, Distell Nigeria, Steve Ighorimoto, stressed that the bold move by NB Plc offers an exciting new chapter for the company as it would help boost the capacity necessary to achieve improved business performance.
“We are excited to be a part of Nigerian Breweries, as we share in the solid track record of growth, including a highly engaged, dynamic, experienced, and diverse team. These changes will strengthen the organization’s manufacturing, marketing, and distribution capabilities while ensuring sustainable growth and maximum value creation for all stakeholders,” Ighorimoto said.
While it is an indubitable fact that the brewery industry in Nigeria enjoys a large chunk of competition from different players, the recent acquisition of Distell Nigeria by Nigerian Breweries Plc is already considered a masterstroke. The acquisition not only reflects the vision of the leadership team but also reinforces the company’s leadership position in the market and belief in Nigeria.
It is believed that the foray of NB Plc into the wine and spirit category is part of efforts to capture significant growth opportunities in that segment. It remains to be seen how this business decision will turn out to improve the fortunes of the company.
Olawale Adebiyi is marketing communication expert based in Lagos
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