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Brewers in Nigeria are facing tough times as the Nigerian economy continues to see sluggish growth amid shrinking consumer wallets.
The industry fared poorly in terms of profits accruable in the first quarter of 2019.
A contributory factor is the decline recorded in sales caused by the shrinking consumer disposable income and economic sluggishness.
“Is it not when you feed well that you will drink beer?” Ike Ibeabuchi, a manufacturer and analyst, asked.
“People are cutting their spending and embracing the value brands,” he added.
Value brands are cheap brands such as Trophy, 33 Export, Life, More, Star Lite, Goldberg and Hero.
The more expensive premium brands are innovating ways of getting young people, including engaging in entertainment and offering free gifts and trips.
According to the Q1 financial results released by Nigerian Breweries, revenue increased marginally by 3 percent, moving to N91.3 billion from the N88.4 billion recorded in the corresponding period of 2018. Its cost of sales moved up 7 percent, from N44.9 billion to N48.2 billion in 2019 while its profit after tax dropped by 21 percent from N10.1 billion in 2018 to N8.01 billion in 2019.
The negative trend was also experienced in Guinness as the company’s revenue dropped by 4 percent to N33.6 billion in 2019, from N34.9 billion in the Q1 of 2018. Its cost of sales dropped marginally by 3 percent to N22.5 billion, having been N23.3 billion in the corresponding period of 2018. The company’s profit experienced a huge decline by 43 percent, dropping from N2.9 billion recorded in 2018 to N1.6 billion in 2019.
International breweries which joined the league of industry giants in 2017, recording a 35 percent upward movement in its revenue from N25.9 billion in 2018 to N35.09 billion in 2019. Its cost … Read More...