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Top breweries in Nigeria report sales growth of 14% in Q3
Despite operational challenges, Nigerian Breweries Plc maintained its lead as the brewery with the largest market share for the quarter…
- Top breweries in Nigeria report sales growth of 14%
- Compete for market share
- Scorecards for each company
The combined income of the three Nigerian Breweries—Guinness Nigeria, International Breweries—rose from N193.927 billion in 2021 to N221.239 billion in the most recent quarter, which concluded on September 30, 2022, an increase of 14.08%.
Despite operational challenges, Nigerian Breweries Plc maintained its lead as the brewery with the largest market share for the quarter that ended September 30, 2022. The world’s largest brewery currently controls around 54% of the market share among the top three breweries in the nation.
The business operating environment has continued to be challenging due to the formidable challenges posed by macroeconomic solid slowdowns, particularly for the real sector of the economy. These challenges include the irregular supply of public power generation, the falling value of the naira, inadequate logistics, insecurity, and other high costs of operational processes directly attributed to poor infrastructure.
In order to achieve this, the financial scoring system for these businesses revealed that Nigeria’s top three breweries recorded a combined cost of sales of N156.854 billion, an 18.2% increase over N132.698 billion reported in the similar three-month period of last year, due to the high cost of production and increased inflation.
About 70.90% of the total revenue generated by these brewers was absorbed by the cost of sales.
These businesses do, however, compete for market share and brand recognition in order to maintain relevance and boost return on investment to their shareholders, even though their primary focus is on increasing profitability and financial performance.
Compete for market share
In the most recent quarter that concluded on September 30, 2022, Guinness Nigeria Plc, which just passed International Breweries Plc as the second-largest Brewer quoted on the Nigerian Exchange based on the market share of revenues, maintained its position.
Our research shows that Nigeria Breweries continues to hold the largest market share in Nigeria, accounting for 54% of the N221.239 billion in total revenues reported by the three biggest brewers. Since we began keeping track of this data in 2013, Nigeria Breweries has maintained its position as the top brand.
At the end of September 2022, Guinness Nigeria Plc still held the number two spot with a market share of 24% of the total revenue. International Breweries was last, accounting for 22.2% of total sales.
Although Guinness publishes its year-end on June 30th, it’s important to note that for the sake of our research, we used the first quarters ending September 30, 2022. This is consistent with the third quarter used by International Breweries and Nigeria Breweries, both of which utilize the calendar year.
Scorecards for each company
- First Position – Nigeria Breweries N119.364 billion
The largest brewer in Nigeria, which accounts for around 54% of the market share, continues to be unchallenged in terms of market share and even the volume of beer sales in the nation, both alcoholic and non-alcoholic. Revenue for the company increased by 19.34% from N100.024 billion in 2021 to N119.364 billion.
The unaudited and provisional figures for the third quarter (three months) ended September 30, 2022, however, indicated a loss of N3.987 billion in profit after tax as opposed to a profit of N498.373 million in 2021 due to increased operational costs brought on by exchange rate fluctuations and devaluation.
About 70% of the entire revenue was lost due to a 23.98% increase in the cost of sales from N67.404 billion in 2021 to N83.570 billion in 2022. The management claims that market seasonality, characterized by poorer volume performance, returned over the past three months.
READ MORE: International Breweries donates to flood victims
The market shrank by a high single-digit percentage due to pressure on consumer disposable money as well as food shortages and inclement weather. But our premium portfolio, which included Heineken, Tiger, and Desperados, performed nicely. Pricing-driven revenue growth in the quarter was offset by higher input costs brought on by a higher inflation rate and higher energy costs.
- Second Position – Guinness Nigeria N53.847 billion
Guinness Nigeria, which recently surpassed International Breweries for second place after seeing their revenues increase by a staggering 81.9%, maintained the position with 11.33% quarter-on-quarter growth to record N52.847 billion in revenue as opposed to N47.469 billion reported during the comparable period of 2021.
Unaudited financial information for Guinness Nigeria, a Diageo Plc affiliate, showed that earnings after tax fell by 32% to N2.748 billion from N4.043 billion in the first quarter of 2021. Although marketing and distribution costs increased by 43% to N9.414 billion from N6.579 billion in 2021, the cost of sales increased by 7.38% to N34.610 billion from N32.232 billion. Earnings per share, basic and diluted, decreased from 185 in 2021 to 125 in 2018.
- Third Position – International Breweries N49.028 billion
Due to its high operating costs, International Breweries has had difficulty increasing its bottom line in recent years.
Revenue for the brewer increased by 5.6% to N49 billion from N46 billion in Q3 2021.
However, the rise in sales costs and other expenses resulted in a record loss for the time period of N3.1 billion, as opposed to a profit of N2.2 billion at the same point in the previous year.
The cost of sales during the period was N38 billion, up 17 percent from N33 billion during the same period the previous year, while the gross profit was N10 billion, down from N13 billion. Similar to other expenses, these increased dramatically from N131 million in Q3 of the previous year to N1.3 billion in Q3.
However, the company said in a statement that continuous supply chain problems and a soft sector caused its volumes to fall in the third quarter of 2022. The company’s managing director, Hugo Rocha, ascribed the change to persistent supply chain problems as well as the effect of inflation over the previous three months on consumers’ disposable income
He said, “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.”
Source: Nairametrics