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From local to global presence, trajectory of International Breweries at 50

From local to global presence, trajectory of International Breweries at 50

Cups clinked and jangled at International Breweries golden anniversary party recently in Lagos. The company said it is ready for another 50 years and more celebration as it is committed to adding further value for investors, communities, the climate and the country as it has always done in its commitment to its vision of Bringing People Together for a Better World. Daniel Obi writes

Trajectory

The corporate decision by the founders of International Breweries Plc to open up the company for foreign investment has transformed the 50-year-old company that operated from rural Ilesha in present Osun State of Nigeria to a global position and standard.

The company founded in 1971 but began operations in 1978 has rightly exemplified the meaning, value and strength of ‘Glocalisation’, a coinage of ‘globalisation’ and ‘localisation’ to define a brand or service that is developed, distributed and recognised internationally but served and used in local market.

From humble beginning, the local company established by Lawrence Omole, a prominent Nigerian entrepreneur, who contributed a great deal of effort to the industrialisation drive in the country has today assumed international status in terms of its appellation, structure, management and products.

Within four decades of its operation, International Breweries was producing alcoholic and non-alcoholic products, including Trophy Lager beer for locals, especially for the Western region of Nigeria.

In January 2012, SAB Miller of South Africa, a subsidiary of AB InBev of Belgium invested in the company, taking over operational management from Brauhaase International Management GMBH, a subsidiary of Warsteiner Group of Germany, which owned 72.03% equity, a company which International Breweries had earlier partnered for operational efficiency.

The new investors quickly moved to action, borrowed heavily from the Nigerian money market to reposition the company that was basically Nigerian holding, populated by the South West region and consigned within Osun State to satisfy the local market.

In its commitment to revamp the Osun brewery where it was domiciled, the investors targeted the Lagos market as they moved the plant to Sagamu, (60 kilometres to Lagos), where they built a world class brewery plant that can compete with any brewery anywhere in the world.

Hugo Dias Rocha who assumed position as Managing Director of the company in January 2020, replacing Annabelle Degroot who was redeployed to Europe, told investors at the company’s 50 years anniversary celebration recently in Lagos that as part of the company’s continuous drive towards growth, “the last few years have seen us invest billions of dollars in the Nigerian economy cutting across the different spectrum of our business operations.”

Dias Rocha specifically noted the $250 million dollar state-of-the-art Shagamu, Gateway Brewery which uses renewable energy for a cleaner environment.

The foundation of International Breweries started with a dream, indeed, a very humble beginning at Ilesha. And according to Dias Rocha, “it is the same spirit of dreaming big that has supported us to initiate various bold and transformational moves that have propelled our company to become an international and multinational enterprise, keeping the humble attitude as a local business.”

It is the same spirit of dreaming big and achieving big that encouraged the investors to later move to Port Harcourt to acquire Pabod Brewery that was run by the Rivers State Government. Thereafter, they moved to Onitsha to acquire Life Brewery, gaining regional strength.

Today, International Breweries is competing favourably in the multibillion naira Nigerian brewery sector with consumer-appealing products like Trophy Lager in variants, Beta Malt, Grand Malt, Budweiser, Hero Lager, Eagle Lager and Eagle Stout.

The Managing Director who was delighted to see the company grow from regional to a multinational company noted that since 1971 the company has grown to become a leading brewery. “We appreciate the vision of our founders both in Nigeria and at the global level. We have and will continue to build on that vision.

“Yes, we are part of a global company, but we are in the same way a local enterprise…We produce 100% of our products in the country. We use local ingredients, and we just import when we can’t find the raw material in Nigeria,” Dias Rocha who holds an MBA from Business School in Sao Paulo, Brazil said.

Seen opportunity by shareholders

With massive investments in the company running into several billions of naira, informed by confidence in the Nigerian consumer and robust market, shareholders were sure of good returns in the middle and long term. Existing shareholders held on to their shares.

Read also: IBPLC invests N60m in cash grant to empower Nigerian entrepreneurs

“Nigerian shareholders keyed in, taking positions and buying the stocks as the company is competing well with the existing and biggest brewery companies,” Boniface Okezie, a shareholder in the company told BusinessDay.

“Even if the shareholders have not reaped dividends since the company turnaround about seven years ago because of the borrowing and engagement in massive investments, what International Breweries has done is an investment into the future and not for immediate reward.”

The vocal shareholder believed that the present share price of International Breweries at less than N5 is under-valued considering the huge investment the company has made. He counselled that “if an investor takes advantage of the low price and moves in when the debt the company incurred to build the factory is liquidated, the shareholders will smile in future. But today, the banks are on their neck. This is understood as the banks themselves have shareholders to satisfy and give returns,” Okezie said.

With confidence for good returns in near future, Okezie noted that the company has invested a lot in infrastructure and modern plants that will guarantee steady productions to match competition. “They deployed electricity without depending on PHCN,” he said.

Assessing IBPLC’s economic contributions

In 50 years of operation, International Breweries has greatly impacted the Nigerian economy on various fronts, including payment of tax, employment, and social investment.

Recalling some of its impact, Dias Rocha said several millions of naira have been invested in various social investment initiatives. “Across our communities where we have our plants and operations, we have identified needed gaps and we have supported the communities with infrastructures such as hospitals, school renovations, provision of potable water, road rehabilitation and other countless interventions.”

In 2019, the company repositioned and launched the International Breweries Foundation to better manage its Corporate Social Responsibility activities. One of its CSR initiatives is the Kickstart entrepreneurship programme where the company makes relevant investments to support youths who are the future of the country.

Rocha further said that in 6 years, the company has given almost N500m seed capital as grant to 334 Nigerian youths; trained more than 1,200 youths in entrepreneurship courses—in turn, the youths have generated almost 600 jobs by employing others.

In addition to giving consumers choices in beer and malt consumption, the company has given many Nigerians livelihood through employment and indirect employment. Rocha said, “about 99.9% of our employees are Nigerians, creating job opportunities directly and indirectly for young men and women across our entire value chain.”

In about three years, the company procured about N77 billion worth of local rice, sorghum, maize, and sugar as support for the agriculture chain to support the Nigerian economy.

On the other hand, International Breweries which incurred a loss of N13.52 billion in the first nine months of 2021 as shown in their statement of cash flows that they paid N804.69 million as tax. The tax payment will increase when it begins to make profits. Within the same period, Guinness paid N2.63 billion as tax while Nigerian Breweries paid N4.52 billion.

The Managing Director however said International Breweries 50 years celebration is not about numbers. “We are not just counting the years. Our celebration is about the value we have been able to deliver and will continue to deliver to our stakeholders: employees; shareholders, customers/consumers; communities, government, and the society at large.”

Assessing the company’s giant strides in 50 years, IBPLC Chairman of the Board, HRM Igwe Nnaemeka Alfred Achebe, said, “50 years is the age of maturity, it is the age where you have seen a lot of things in your lifetime – the good, the bad, and the ugly. Therefore, we can say of International Breweries: we came, we saw, we conquered. We are not resting on our oars and will continue to drive value for all stakeholders.”

“Our story has been a classic case of transformation and delivering great value and we are immensely grateful to all Nigerians for standing by us since our incorporation and helping us reach this milestone where we have moved from being a regional brand to become a household national name with international pedigree,” the Chairman said.

With an understanding of the importance of corporate governance and ethics in business, Igwe Achebe assured that the board is focused on continuously entrenching the values of strong ethics, with corporate governance as a top priority. “We are convinced this is what will help us to continue to build a sustainable organisation that will continue to serve our shareholders year on year.”

In 50 years, the continuous market acceptability of International Breweries’ products both locally and internationally produced, has been phenomenal and encouraging. It is therefore only the market backed by research, quality product and community engagement that will sustain the company’s next 50 years and beyond in its drive to bring people together for a better world.