Economic Downturn Forces Many Nigerians to Abandon Beer, Says Nigerian Breweries CEO

The Chief Executive Officer of Nigerian Breweries Plc, Hans Essaadi, revealed on Monday during the company’s investor call that the economic challenges in Nigeria have reached a point where citizens are unable to afford beer after a hard day’s work.

According to Essaadi, the past year has been unprecedented for the brewery giant, witnessing a significant decline in the mainstream lager market due to Nigerian consumers facing financial constraints. The CEO expressed this concern following the release of the company’s 2023 results, highlighting the struggles faced by citizens to purchase popular brands like Goldberg.

Nigerian Breweries reported a staggering N153 billion foreign exchange loss attributed to the devaluation of the naira for the year ending December 2023. Despite growing its revenue by 8.9 percent to N599.64 billion, the company faced a significant setback with a net loss of N106.31 billion, compared to a gain of N13.19 billion in 2022.

The NB Board of Directors acknowledged the challenging business landscape in 2023, citing factors such as the redesign of naira notes causing cash shortages, high inflation rates exceeding 30 percent, removal of fuel subsidies, devaluation of the naira, and foreign exchange scarcity. These issues collectively created a turbulent environment for both businesses and citizens.

Essaadi acknowledged the headwinds faced by the company, stating, “The company was able to grow its revenue by nine percent compared to the previous year aided by a positive price mix. However, the operating profit fell by 15 percent due to higher input cost and one-off reorganization costs despite strong and aggressive cost savings and other efficiency measures.”

Despite these challenges, the NB Board expressed its determination to navigate the current macroeconomic headwinds by leveraging its decades of experience operating in Nigeria. The board assured stakeholders that the company would remain resilient, forward-thinking, and committed to long-term value creation.

In response to the economic pressures, Nigerian Breweries had previously increased the prices of its products in August to accommodate rising input costs. The company, known for producing popular alcoholic beverages such as Star Lager, Gulder, Legend Extra Stout, Heineken, Goldberg, Life, and Star Radler, is grappling with the broader impact of economic instability.

The Central Bank of Nigeria’s harmonization of the foreign currency market in June 2023, leading to the devaluation of the naira, has had a ripple effect on various companies, resulting in significant forex losses. However, the banking sector fared relatively better, enjoying FX revaluation gains.