The management of the Nigerian Breweries Plc (“NB Plc”), the country’s largest brewer by volume and sales has set a goal to expand its leadership in the key areas like: premium lager, build scale in mainstream segment (formerly value segment) and drive malt growth to outsmart stiff competition from rivals in the industry.
The above set up goal was revealed when the company laid out its strategy during its annual ‘Financial Market Forum’ held at the company’s headquarters in Iganmu, Lagos. The company’s Managing Director/CE, Jordi Borrut Bel and Finance Director, Rob Kleinjan held a briefing of the company’s business with analysts and took them on a tour of an open market to demonstrate how the company wants to build stronger partnerships with retailers and distributors.
In the statement, the firm points out that in macro economy overview, the Nigerian market remains very attractive, stating that 70% of the population is under 29 years of age with increasing urbanization. The firm notes that inflation has declined to 11% albeit still high but a huge improvement compared to previous years. It also points out that the exchange rate has stabilized, with oil prices rising and GDP growth rate climbing out from the negative territory to nearly 2% at the end of Q1 2018.
The brewer said that digitization is now playing an increasing role on how consumers interact with the brands as well as how it interacts with consumers as nearly 95 million Nigerians out of a population of 193.4 million are internet users.
The firm notes that beer consumption in Nigeria continues to holdup to nine litres per capita when compared to an African average of 22 litres per capita. However, the low figure presents room for growth.
The company reports indicates that, lager is expected to remain the bulk of the category at about 82% in 2017 and declining marginally to 81% by 2020. It points out that consumers have been down trading to cheaper brands which is a new reality.
While revealed that Stout makes up 10% of its portfolio. Other categories make up the rest.
The brewer notes that its profit pool has been under short term pressure, driven by consumer down trading, currency devaluation and material cost inflation. It is a trend it sees continuing through 2018.
PRICE LADDER IN LAGER
| CATEGORIES | 2012 | 2018 |
| PREMIUM | Heineken – N300 | Heineken – N300 Tiger – N200 |
| NATIONAL PREMIUM | Gulder – N210 Star – N200 |
Gulder – N250 Star – N230 |
| MAINSTREAM | Goldberg – } N200 Life “33” Export |
|
| ECONOMY | “33” Export – } N150 Goldberg More – N130 |
More – N150 |
The market remains increasingly competitive.
To remain the leading brewer in the country, the company said it needs to expand leadership in premium lager, build scale in mainstream lager and drive malt growth at with prize? It was not disclosed.
In the premium segment, Heineken brand is at the core and continues to grow at double digits. NB wants to accelerate the brand expansion by making it easily accessible to consumers. To accomplish that, it wants to leverage some of the platforms it has such as the UEFA Champions league, Formula 1, Fashion & Design and James Bond.
It notes that the roll out of Tiger brand, the new premium brand that was launched earlier this year is continuing. At the current time, it is only available in Lagos but roll out will continue across the country.
The company said that the core of the market remains mainstream. The firm covers different price points. To win in the mainstream category, the company wants to excite Nigerians with strong portfolio of national and regional brands. It also wants to lead in innovation and digital activations to better connect with the dynamic Nigerian millenials.
The company said it still leads in this category with its Maltina and Amstel Malta brands, though it has suffered in the last few years due to the economy.
The firm wants to lead in this category through innovations with nourishments, energy and health.
It also wants to drive affordability in core non-alcoholic channels.
NB wants to innovate in packaging and recipes to nourish more Nigerians and excite with local foods/fruits that are heath friendly.
NB said to build a winning route-to-market, it would need to increase its proximity to retailers, build strong partnerships with distributors and ensure win-win incentives for distributors.
The company wants to provide its sales force the ability to make quick decisions at point-of-sale.
Other measures the brewer would like to implement includes improving end-to-end productivity, which are classified in three segments:
Revenue Management; which is includes promotion optimization, discounts and trade terms and brand portfolio and mix management.
Consumer Value Engineering: This involves packaging optimization and Trade Marketing / POS rationalization.
Cost Optimisation: It means implementing synergies from mergers of previous years to save cost, managing fleet effectively; having a financial / funding strategy and ICT cost license and infrastructure.
Part of the company’s strategy to win includes sustainability. It lists some of its achievements and goals for the future to include willingness to reduce water consumption by recycling water back to the environment; reduce the use of C02 by 2020; growing with communities has yielded built over 68 schools over the years; the company employs over 250,000 farmers; promotes health and safety; Building high performing teams to develop great business leaders, grow its talent pipeline at all levels, build critical capabilities and strengthen functional excellence and leverage diversity and culture.
NB notes that the new excise duty that came into force in June has provided transparency and a level playing field. It favours it over the previous ad valorem tax. The company can now plan ahead.
Tiger premium Lager was first launched in Lagos earlier this year to test its performance. According to the brewer, the brand is doing well. The bottle size is 45cl instead of the standard 60cl. The plan is to eventually roll it out nationally. Management notes that it now has the Heineken brand and Tiger as premium brands. It does not rule out the introduction of other premium brands in the future.
The company states that the new premium Stella lager that was launched last year, its performance in the test phase. However, it is now trying to understand what to do with it, whether to launch it regionally or nationally.
NB disclosed that has no plans to go into spirits. The company’s focus is on beer, it noted.
The Caption Photo: The Nigerian Breweries Managing Director/CE, Jordi Borrut Bel
