Nigerian brewers’ battle for market share heats up as headwinds grow

Two of Nigeria’s listed biggest brewers, Nigerian Breweries Plc and International Breweries Plc gained more market share in the first quarter of 2024 despite the losses they posted amid mounting economic headwinds, according to BusinessDay analysis.

Market share is the percent of total sales in an industry generated by a particular company.

It is calculated by dividing the company’s sales over the period by the industry’s total sales over the same period, giving an idea of the size of a company to its market and competitors.

In the race for market share, Nigerian Breweries retained the top as it holds 55 percent of four brewers, which is higher than 52.6 percent in Q1 last year, while International Breweries’s market share also increased to 25 percent from 23 percent.

However, Guinness Nigeria Plc’s share dipped to 18.8 percent from 23.1 percent while Champion Breweries Plc retained its market share of 1.1 percent.

“Nigerian Breweries has always been leading in market share but for International Breweries and Guinness Nigeria, there has always been a drag in market share which usually alternate with periods,” Bolade Agboola, consumer goods analyst at ChapelHill Denham, said.

“For International Breweries, the growth in market share can be attributed to the additional products added to their portfolio and interest by consumers in them,” she said, adding that pricing is a major determinant of consumer choices.

Uzo Uchenna, professor of marketing at Lagos Business School, said Guinness’ restructuring may have affected some of their sales activities at the beginning of the year but the firm will pick up as the rest of the year evolves.

He stated that the initial effect of restructuring led to a reduction in Guinness Nigeria’s market share.

“There is a new partnership between Guinness Nigeria and Tolaram Group that is being concluded at the moment and now that there is a plan in place, there will be an uptick as the year goes on,” Uchenna said.

Further analysis of the firms’ financial statements shows that their total revenue rose to N412.4 billion in the first quarter of 2024 from N234.3 billion in the same period of 2023.

The four brewers saw input cost gulp 67.5 percent of their cumulative revenue from 65.9 percent in the previous year.

The Nigerian brewery industry has been faced with a challenging macroeconomic environment as it grapples with shrinking margins and mounting pressure on its profitability.

These challenges include high electricity costs, naira devaluation, weak logistics, insecurity, and other high costs of operations attributable to poor infrastructure which have continued to make the business operating environment difficult, especially for the real sector of the economy.

To this end, the financial scorecard for these companies showed that the high cost of production and inflationary pressure is making four of Nigeria’s beer makers record a combined cost of sales of N278.4 billion, an 80.4 percent growth from N154.3 billion reported in comparable three months period of last year.

The cost of sales consumed about 67.5 percent of the total revenue of these brewers.

Nigerian Breweries bemoaned the naira devaluation and rising interest rates.

“Operating profit grew by more than 1000 percent, underlying the strong topline performance and rigorous cost-saving initiatives in the period,” said Uaboi Agbebaku, company secretary at Nigerian Breweries, in a statement.

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