Nigerian Breweries Plc is considered to be the pioneer in the Nigerian brewery industry. Incorporated in 1946, headquartered in Lagos, NB is today the largest brewing company in Nigeria and the second largest in terms of market capitalization. In June 1949, first bottle of STAR lager beer rolled off its Lagos Brewery bottling lines.
Nigerian Breweries Plc has a strong portfolio of products which spans across time and experience. Some of the well-known brands the company dons are Star lager beer, Gulder lager beer, Maltina, Legend Extra Stout, Amstel, Heineken lager beer (which was re-launched into the Nigerian market in 1998). Innovative Maltina Sip-it, packaged in Tetrapaks was launched in 2005. The company diversified in premium non-alcoholic soft drink in 2006 with the launch of Fayrouz. In 2010, NB launched Climax, an herbal energy drink.
Cost Minimization: Nigerian Breweries enjoys cost advantage and is competent in translating it into a fatter bottom line. The company is also taking initiatives to further bring about cost effectiveness. It is involved in developing Sorghum hybrids to produce better quality malt and also to reduce its dependence on imported food grains. This would help the company beat its rising costs. Brewers in Nigeria import close to 25% – 35% of the raw materials making them heavily reliant on global food grain prices and fluctuations in foreign exchange.
The company’s COGS (as a % of revenues) though increased 626bps Y/Y to 50.4% in FY2012 on the back of rising food grain prices. However, the company remains cost effective and one of the best in the industry, with its closest competitor, Guinness operating at COGS of 55.7% in FY2012.
First Mover Advantage: Nigerian Breweries is the pioneer in the brewing industry. The company is the largest brewery in Nigeria, dominating the industry with a market share of 60.0%, followed by Guinness Plc with a distant 20.0% share of the Nigerian brewery market. Nigerian Breweries is the largest Fast Moving Consumer Goods’ (FMCG) company in terms of product turnover. Being the first, makes its business acumen and understanding of the market stand out as is reflected in its financial results too. In addition, extensive experience in the Nigerian market coupled with strong & tested distribution network makes the company bear with struggling times like now. The company has come a long way from its humble beginning in 1946; Nigerian Breweries today operates through eight breweries covering all states of Nigeria. Ama Brewery is today, the biggest brewery in Nigeria.
Strong Supply chain network: Heineken N.V. holds 54.10% stake in Nigerian Breweries plc. Nigerian Breweries accounts for approximately 10.0% of the total sales of its parent company, a percentage which is higher than other subsidiaries of Heineken N.V. Nigerian Breweries leverages technological expertise of its parent company. Its systems, operational processes and procedures all conform to international standards. Nigerian Breweries’ research and development center started in 1987 helps the company stay ahead of the curve and bring about innovations in the industry. NB diversified into the soft drink market with the launch of “Fayrouz” in 2006, much ahead of its competitors, seeing a potential untapped market segment then.
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