• Monday, July 22, 2024
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BusinessDay

Nigerians gulp spirits as beer loses flavour

Spirit vs beer

Tunde Akinola, a recent graduate, was not really interested in spirits until recently. “I appreciate the different flavours that can be found in whisky,” he said. “I was never really interested in spirits until recently. I was at a party and I tried some spirits, and I was really surprised by how much I enjoyed it.”

Akinola says that he now enjoys whisky both at home and with friends.

Nnamdi Ogbeide is another Nigerian who has turned to whisky. He says he is simply looking for something new to try.

“I’ve always been a beer drinker,” he said. “But I’ve been hearing a lot about spirits lately, and I wanted to see what it was all about.”

“There have been changes in consumption trends recently. Young guys are not drinking beer as much. Spirits are more exciting than beer,” Abiola Gbemisola, a consumer analyst at FBNQuest, said.

Analysts said many Nigerian youths have traditionally been fond of beer, but in recent years, they are increasingly turning to whisky or spirits.

Read also: Three takeaways from beer makers’ performance in Q1

A new report by Williams & Marshall Strategy, a global market research company, showed Nigerians have shown an increasing interest in exploring a more comprehensive range of spirits.

Spirit vs beer

According to the report, the gradual shift in taste preferences can be attributed to various factors, including globalisation, exposure to international cuisines, and the influence of the digital age.

“With increased connectivity and access to information, Nigerians have become more aware of global trends, including the different ranges of alcoholic beverages available worldwide. This newfound exposure has piqued the curiosity of alcoholic beverage consumers and ignited a desire to explore different tastes and experiences,” Williams & Marshall Strategy said.

“Additionally, the rise of Nigerian-owned wineries has contributed to the growth of the local wine industry. These wineries not only produce high-quality wines but also showcase the unique characteristics of Nigerian terroir. Beyond wine, ‘spirits’ have also witnessed a transformation in Nigeria. Whisky has also gained popularity among Nigeria’s elites,” the report added.

The shift away from beer is significantly impacting the Nigerian beer industry. BusinessDay’s analysis showed the profit after tax margin of the biggest brewer makers turned negative in the first quarter of 2023, the first time in five years.

The combined profit margin of Nigeria Breweries, Guinness Nigeria, International Breweries and Champion Breweries slipped to -0.048 in the first quarter of 2023 from 0.085 recorded in the same quarter 2022.

Further findings showed the firms recorded a combined loss of N11.276 billion in the first quarter of 2023, a sharp contrast compared to a profit of N21.35 billion recorded during the same quarter in 2022.

Nigeria Breweries, a subsidiary of Heineken NV, experienced a loss of N10.715 billion in the first quarter of 2023, compared to a profit of N13.61 billion in the same period of 2022 while International Breweries recorded a loss of N2.31 billion, compared to N0.72 billion in first quarter of 2022.

Read also: FG imposes 30% tariffs on wine, spirit, cigarette

Champion Breweries, located in Akwa Ibom State, recorded a loss of N0.96 billion in the first quarter of 2023, compared to N0.55 billion in the same period of 2022.

“Nigeria’s alcohol landscape has expanded, and Nigerians have shown an increasing interest in exploring a wider range of spirits – from gin to cognac and whisky,” Clifford Egbomeade, an analyst in Nigeria’s beer industry, said.

Last month, Nigerian Breweries acquired an 80 percent stake in Distell Wines and Spirits Nigeria Limited as part of efforts to capture significant growth opportunities in the wines and spirits segment of the brewing industry.

According to the announcement contained in a notification of the proposal sent to the Nigeria Exchange Limited and signed by Uaboi Agbebaku, the company secretary, Nigerian Breweries received the offer from Heineken Beverages Limited to acquire an 80 per cent majority interest in Distell Wines & Spirits Nigeria Limited.

To that end, “the board resolved to consider the offer in detail with support from external legal and financial advisers and thereafter make a decision thereon in the coming weeks. The outcome of the decision will be communicated in due course,” the company secretary said.