The trio of Nigerian Breweries, Guinness, and International Breweries recorded a 14.08% increase in collective revenue to N221.239 billion in the last quarter that ended September 30, 2022, compared to N193.927 billion in 2021.
Nigerian Breweries Plc has retained its position as the brewer with the highest market share for the quarter that ended September 30, 2022, despite operational headwinds.
Checks by Nairmetrics revealed that the brewery giant holds about 54% of the total market share of the three top brewers in the country.
Economic Challenges: The daunting challenges posed by strong macroeconomic headwinds, which include the erratic supply of public electricity, falling naira, weak logistics, insecurity, and other high costs of operations attributable to poor infrastructure, 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 Nigeria’s top three beer makers record a combined cost of sales of N156.854 billion, an 18.2% growth over N132.698 billion reported in comparable three months period of last year.
- The cost of sales consumed about 70.90% of the total revenue of these brewers.
- However, while these companies focus more on improving their profitability and financial performance they are also fighting for market share and brand awareness to be able to remain relevant and increase return on investment to their shareholders.
Fight for market share: Guinness Nigeria Plc which recently overtook International Breweries Plc as the second-largest Brewer quoted on the Nigerian Exchange based on the market share of revenues sustained its position in the last quarter that ended September 30, 2022.
- According to our findings, Nigeria Breweries remains the largest Brewer in Nigeria by market shareholding holding on to 54% of the total revenues of N221.239 billion reported by the three largest brewers. Nigeria Breweries has held on to the number one spot since we started tracking this data in 2013.
- Guinness Nigeria Plc however retained its number two position at the end of September 2022 with a market share of 24% of the total revenue. While International Breweries trailed with a market share of 22.2% of total revenue.
- Important to note that Guinness reports its year-end on June 30th, however for this analysis we used the first quarters ending September 30, 2022.
- This aligns with International Breweries and Nigeria Breweries which both use calendar years as their third quarter.
The companies’ scorecards
Third Position – International Breweries N49.028 billion
- Over the past years, International Breweries has struggled to grow its bottom line following the high cost of operations.
The brewer recorded a 5.6% growth in revenue to record N49 billion from N46 billion in Q3 2021. - However, the increase in the cost of sales and other expenses led to a loss record for the period to the tune of N3.1 billion compared to a profit of N2.2 billion same time last year.
- During the period, the cost of sales was valued at N38 billion, a 17 high from the N33 billion in the same period last year while the gross profit stood at N10 billion from N13 billion in the same period last year. Similarly, other expenses grew significantly by to N1.3 billion from N131 million in Q3 last year.
- The company in a statement however said its volumes declined in the third quarter of 2022 due to a soft industry and ongoing supply chain constraints.
- Hugo Rocha, the company’s Managing Director, attributed the development to ongoing supply chain constraints, and the impact of inflation on consumers’ disposable income in the last three months.
- He states, “The last three months have been characterized by elevated inflationary pressure which has had an impact on consumers’ disposable income. The period experienced especially severe weather with a longer rainy season and floods in key markets. However, despite the difficult quarter, we remain focused on our winning commercial strategy. Year-to-date, our brands remain resilient and continue to deliver volume growth. We remain committed to returning to profitability and creating value for our stakeholders.”
Second Position – Guinness Nigeria N53.847 billion
- Guinness Nigeria which recently overtook International Breweries for the second position after seeing their revenues rise by a whopping 81.9% also retained the position with 11.33% quarter on quarter to record N52.847 billion in revenue as against N47.469 billion posted during the comparable period of 2021.
- Guinness Nigeria, a subsidiary of Diageo Plc, unaudited results for the period ended first quarter ended 30 September 2022 revealed a 32% decrease in profit after tax to N2.748 billion from N4.043 billion in 2021.
- However, the cost of sales rose by 7.38% to N34.610 billion from N32.232 billion in 2022 while marketing and distribution expenses climbed to N9.414 billion from N6.579 billion in 2021, representing a growth of 43%.
- Basic and diluted earnings per share (kobo) stood at 125 kobo from 185 kobo in 2021.
First Position – Nigeria Breweries N119.364 billion
- This is the largest brewer in Nigeria and makes up about 54% of the available market share and remains the undisputed number one based on market share and even volume of alcohol and non-alcoholic beer sales in the country.
- The company’s revenue grew by 19.34% to N119.364 billion from N100.024 billion in 2021
- However, following high operational costs caused by exchange rate fluctuations, and devaluation, the unaudited and provisional results for the third quarter (three months) ended 30th September 2022 showed a loss of N3.987 billion in profit after tax as against a profit of N498.373 million in 2021.
- The cost of sales rose by 23.98% from N67.404 billion in 2021 to N83.570 billion in 2022, consuming about 70% of the total revenue.
- According to the management, the last three months saw the return of market seasonality characterised by lower volume performance.
- “The market decreased by high single-digit reflecting pressure on consumer disposable income as well as heavy rains and foods.
- Nevertheless, our premium portfolio of Heineken, Tiger and Desperados did well. Revenue growth in the quarter driven by pricing was offset by higher input cost arising from increased rate of inflation and higher energy cost”.
