Nigeria among top 5 growth markets for e-commerce in alcoholic drinks

The purchase of alcoholic drinks via e-commerce channels is gaining traction with Nigeria, Africa’s biggest economy, identified among the top five key markets with potential for growth, a new report by Euromonitor International, the world’s leading independent provider of strategic market research shows.

This means that the alcohol industry, which historically has been very hesitant to embrace online, has now begun to embrace it after the COVID-19 pandemic disruptions and lockdown measures affected on-trade market channels e.g bars, restaurants, clubs, hotels, etc., in 2020.

According to the report titled ‘Best Markets for Sustained E-Commerce Growth’ made exclusively to BusinessDay, Nigeria’s alcoholic drinks are projected to see a marginal total volume growth of 2.7 percent estimated 2.27 million litres in 2021 from 2.21 million litres in 2020. E-commerce is a contributing factor to the projection.

“Manufacturers are set to invest in new and more sophisticated ways of delivering their goods to the market following their COVID-19 experience. Thus, they are predicted to respond to the ongoing shift to e-commerce,” the report states.

The report also adds that consumers may continue to work from home and remain reluctant to return fully to on-trade establishments or crowded retail spaces. “As a result, more consumers are likely to be attracted by convenient and safer online shopping.”

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Euromonitor’s e-commerce readiness model, which helps companies anticipate long-term e-commerce growth, even after the pandemic subsides, showed that Nigeria’s e-commerce channel potential at 1.27 percent is the only African country among the top five namely, South Korea, China, Georgia, and Vietnam

Last year, a Mastercard study on consumer spending revealed that over 81 percent of consumers in Nigeria were shopping more online since the onset of the pandemic as Data, apparel, beauty products and Fast-Moving Consumer Goods saw the highest surge of online activity.

Abiola Gbemisola, consumer analyst at FBNQuest who agrees with the report, says companies have increased their digital outlets for them to sell more although not really expensive.

With an average beer consumption of 12.28 litres per year, Nigeria leads the top 10 biggest beer-drinking countries in Africa making the sector increasingly lucrative.

According to AsokoInsight market data, beer is the most widely consumed alcoholic beverage with a 55 percent market share, followed by spirits (30%) and wine (15%).

Also, the reopening of the economy and more importantly, nightclubs and event centres has increased the consumption of alcoholic drinks, especially beer.

An analysis of top brewer’s financial reports such as Nigerian Breweries, Guinness Nigeria and International Breweries Plc showed that they performed better in the first three months (Q1) of 2021 than in the comparable period of 2020.

Nigerian Breweries’ net revenue for Q1 2021 jumped to N105.6 billion, 27 percent stronger than the figure posted in the same quarter of last year, Guinness Nigeria shows that the brewer posted revenue of N42.61 billion for the quarter ended 31 March 2021 and International Breweries Plc reported a 10.2 percent revenue increase to N38.96 billion as of March 31 2021.

“The premiumisation trend towards the end of the review period was derailed, except among a small niche of affluent consumers, by the pandemic. However, more people are expected to look to better quality and more sophisticated options as the economic situation improves and they return to pandemic lifestyles,” the report predicted.

It also predicted that premium and economy portfolios in beer and spirits are expected to see good growth rates, and a higher level of polarisation is predicted.