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Beer in Nigeria a Commentary on Industry Trends, Threats and Legislation

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Beer in Nigeria a Commentary on Industry Trends, Threats and Legislation NIGERIAN BEER MARKET Beer in Nigeria A commentary on industry trends, threats and legislation The brewing industry is one of the fastest growing structures and strategy coupled with industries; it is highly dynamic and contributes about technical competence and 25% to the Nigerian food processing and professionalism have made the Full name: The Federal manufacturing sector. Demand for beer (both local and products from this industry relevant Republic of Nigeria to the hearts of consumers in spite Population: 130.2 million imported) increased markedly following the return of of the condition of the economy. (UN, 2005) the country to democratic rule in 1999 and a marked While there are frantic efforts to Capital: Abuja improvement in economic conditions. Annual sales of resuscitate some dormant firms in Area: 923,768 sq km beer increased on an average by ten percent from the industry, Guinness and Nigeria (356,669 sq miles) 1999 to 2002. Over 20million Nigerians consume beer Breweries have remained top Major languages: English but only ten percent of them are women. players in the Nigerian stock (official), Yoruba, Ibo, Hausa exchange over the past three years. Major religions: Islam, The brewing industry controls Christianity, indigenous By Greg Udeh about N347 billion ($2.7 billion) of beliefs the overall market capitalisation of Monetary unit: 1 Nigerian all quoted companies as at Dec naira = 100 kobo ottled lager and stout are the 2005. Quoted companies include Main exports: Petroleum, Bpredominant beer types in Nigerian Breweries, Guinness petroleum products, cocoa, Nigeria. Currently domestic beer is Nigeria Plc, Golden Guinea rubber only canned in small quantities Breweries Plc, Champion Breweries GNI per capita: US $560 however imported canned beer is Plc, Jos International Breweries, (World Bank, 2006) fashionable among high-income International Breweries Plc, Premier Internet domain: .ng upwardly mobile beer consumers. Breweries – while the unquoted International dialling code: Nigerians prefer beer with companies are Sona Breweries and +234 comparatively higher alcoholic The Nigerian market is growing to Consolidated Breweries Plc. The contents. The alcoholic content by meet the needs of the middle to high- major distillers in the country are volume of the locally produced beer is income groups. Intercontinental Distilleries Ltd and within the range of 4.5% and 7%; this Nigerian Distillers Ltd. is usually lower for imported products. Production has grown rapidly and Between 2004 and 2005 there was The industry provides direct the volume of production and a reduction in consumption of beer employment for over 30,000 persons consumption has increased over the due to a decrease in disposable and indirect employment another years. A ban on the importation of income levels in the country. 300,000 in firms providing ancillary barley in 1988 forced most firms to Competing products such as the “Production has services. resort to local raw materials. Today introduction of mobile phones and grown rapidly and Beer is produced and consumed most breweries use maize and the N25Billion bank consolidation the volume of predominantly in the east and west of sorghum as major raw materials in caused this. The market has since production and the country. This is due to religious their production process. This picked up and in the last fiscal year consumption has practices in the Northern states. In the changeover in input has however (2006) showed a tremendous increased over the year 2000 Sharia Islamic rule was necessitated the use of expensive improvement and is currently one of years. A ban on the introduced in some 12 out of 19 imported enzymes in the production the blue chip stocks contributing to importation of barley northern states. Alcohol cannot be sold process. the growth and overall development in 1988 forced most in these states but military zones of the capital market. Shareholders within are seen as Federal territory and Beer market trend in the market have continued to firms to resort to still allow the consumption of alcohol. The brewing industry market experience a boom in the price of local raw materials. Today most BASIC INDUSTRY STATISTICS breweries use maize and sorghum as major raw materials Year 2001 2002 2003 2004 2005 2006 in their production Total beer consumption 9.4 10.0 10.7 11.1 10.7 12.0 process.” (million hectolitres) Per capita beer 6.5 7.0 7.3 7.5 7.2 8.0 consumption (litres) Imports (hectolitres) 180,000 195,000 N/A N/A N/A N/A N/A – Not Available Note that figures above are best estimates available at the time of collating the report The BREWER & DISTILLER INTERNATIONAL • Volume 3 • Issue 2 • February 2007 • www.ibd.org.uk 18 their shares. The shares are also Water contamination, air conservation and the present being sought after by many pollution, solid waste disposal and problems of environmental discerning local and foreign environmental degradation are resource degradation need not arise investors major environmental problems; within the framework of Nigeria is also exporting a modest some of them caused by the sustainable development. The two amount of bottled beer and stout to brewing industry. The Nigerian major producers of beer have Europe, utilising the government’s guidelines require industries to already installed high-tech Export Expansion Grant of 40% of monitor their effluent in-house and treatment plants in their bid to the FOB value. The main attraction the State and Federal authorities ensure they meet regulatory for Nigerian beer in this niche cross check the effluent requirements with regards to market is the higher level of characteristics to ensure effluent discharge. Waste-to- alcoholic content. compliance with set standards. wealth opportunities allow disposal The Nigerian import market is Economic development can be of spent grains to farmers as feed growing to meet the needs of the compatible with environmental for pigs and poultry. I middle to high-income groups. Major imported brands in Nigeria are canned stout, Heineken, Becks, Carlsberg, Budweiser, Castle and Amstel lager. On average imported beer is retailed at double the price of locally produced brands. Industry sources also indicate that modest competition exists from home-brewed beer. While this provides some alternative enjoyment and pleasure benefits, production of Burukutu, Pito and palm wine in the home brewed sector is difficult to measure. Distribution There are two broad segments in the beer distribution channel. The primary channel is that controlled directly by the breweries and importers. This involves direct physical distribution of bottled beer to wholesalers via either company owned trucks or third party/independent transport companies. The secondary segment involves distribution from wholesalers to bulk breakers, retailers and ultimately to the consumer. Industry sources estimated beer retailers in the country at approximately 500,000 in 2003. Environment Towards the end of the 1980s Nigeria began to place high priority on environmental matters particularly water-related issues. This is reflected in the environmental policies, legislation and action plans introduced by the Government. In all of these, environmental monitoring activities, especially with regards to water quality, are given strong consideration. A significant proportion of the population still rely on surface water for drinking, washing, fishing and swimming. Industries also need water of acceptable quality for processing. The BREWER & DISTILLER INTERNATIONAL • Volume 3 • Issue 2 • February 2007 • www.ibd.org.uk 19 BREWING IN NIGERIA The star of Nigeria The story of Nigeria’s market leader Nigerian Breweries is the Ama Brewery is the biggest pioneer and largest brewery in Nigeria and one of the brewing company in most modern in the world (see Nigeria. It was panel). Its capacity is 3.5 million hectolitres; Ibadan is next largest at incorporated in 1946 and 2.2mhl, Lagos at 1.9, Aba at 1.0 and recorded a landmark Kaduna at 800,000 hl per annum. when the first bottle of Operations in Enugu brewery were Star Lager beer rolled off discontinued in 2004. Thus, from its the bottling lines in its humble beginning in 1946, the Lagos Brewery in June company now has five operational 1949. breweries from which its high quality products are distributed to all parts of the country. With about 135,500 shareholders, By Patrick Olowokere the authorised share capital of Nigerian Breweries plc Nigerian Breweries Plc is $30 million. Heineken N.V of Holland has a majority shareholding of 54.1% his was followed by Aba while the remaining equity is held by T Brewery which was Nigerian citizens and Associations. commissioned in 1957, Kaduna The company’s turnover in year 2005 Brewery in 1963 and Ibadan was $617 million and the operating Brewery in 1982. In September profit was $118 million. Nigerian 1993, the company acquired its fifth Breweries is a market leader with brewery in Enugu while in October around 60% market share in the lager 2003, a sixth brewery at Ama in sector and 45% in the non-alcoholic The product range from Nigerian Breweries. Enugu state was commissioned. malt drink sector. The brewery at Ama The Silo Building to the right (enclosed), the Brewhouse & service block is next with The main production areas of the brewery: the cellars in the distance. The Utilities The empty bottle in the background and Brew hall, bottling hall, offices and utilities, department is on the left. the water treatment plant in front. AMA Brewery was envisioned to be a world-class, pacesetter Facilities in the brewery includes, six synchronised electricity and best in class brewery, it was conceived based on world generators with an output of 2,250KVA each, five water trends in brewing and the ability to deliver the required volume boreholes, (3 x 100m3/hr and 2 x 80 m3/hr) capacities, a spent most efficiently in a manner that is consistent with NB quality grain burner with thermal energy recuperation of about 5 MW policy and vision of a being a world class organisation.
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