Who leads Nigeria’s beer market?

In market economies, beer is included in the basket of goods the government uses to calculate the Consumer Price Index. For example, in the United States, to measure the industry’s full economic impact, the Beer Institute and National Beer Wholesalers Association conduct a ‘Beer Serves America’ study every two years.

In Nigeria, however, the wages, benefits, sales and price volume of the beer industry are virtually shrouded in secrecy, thereby making it difficult for experts to calculate the exact figures in business, personal and consumption taxes and especially market leadership. Every information about the sector can be said to be largely predicated on extrapolation, particularly from the financial statements of major brewers.

It then follows that the ripples of the said mystery that characterises Nigeria’s beer market is as old as the industry itself, even as it raises its disputatious head once again.

The raging battle is currently between three major brewers: International Breweries (owned by AB InBev), Guinness Nigeria (owned by Diageo) and Nigeria Breweries (partly owned by Heineken).

Comparative data from the financial statements of three of the largest beer makers in the country suggests that Guinness has lost its place as the second-largest brewery by revenues to International Breweries.

As at the half-year ended December 2018, Guinness Nigeria reported revenues of about N67.79bn, compared to N70.5bn in the same period a year earlier. International Breweries, on the other hand, reported half-year revenues for the period ended June 2019 of N68.6bn, slightly overtaking its rival.

It is important to note that Guinness reports its full-year results ended June 30 every year, while International breweries adopts a full year-end date of December 31. In the quarter ended March 2019, Guinness reported revenues of N33.6bn compared to International Breweries’ N33.5bn. In the quarter ended September 2018, Guinness posted revenues of N28bn compared to International Breweries N30.2bn.

Also, in the quarter ended December 31, 2018, Guinness and International Breweries reported revenues of N39.7bn and N32.7bn respectively. Guinness is yet to release its June 30, 2019 audited results.

Guinness typically posts strong revenues in the quarter between April 1 and June 30. Both companies do not publish their volumes.

But with a half-year (January to June 2019) revenues of N170.1bn, Nigerian Breweries clearly leads the duo of Guinness and International Breweries.

Experts, who work closely on both the agency and client side of the beer heavyweights, vehemently disagree with the figures. While they admit that Nigerian Breweries is leading the pack, International Breweries’ reported second position is untenable to them.

An IMC expert, who would not want his name in print, believes that in as much as the report is helpful, every other thing was based on the companies’ financial statements, which could be disproved.

He said that only the sales volume of each brewer could enable analysts to come up with accurate data.

“The controversial analyses are somewhat helpful. However, I wish that the companies in question would publish their sales volumes (quantity sold) in their financials.

“By using the revenue (financial statement) to determine market share, one is assuming that all the beers were sold at the same price, whereas, in reality, the products were actually sold at different prices. What if International Breweries sold more of Budweiser (premium price), while Guinness sold more of Stout/Harp (cheaper)? Such a scenario can produce the kind of market share the mass media is bandying about. My point here is that the result in your analyses may not reflect reality, as the true picture will only become clearer when we consider the sales volumes vis-à-vis the revenues,” he said.

The Nigerian beer market was dominated by Nigeria Breweries and Guinness for decades before AB InBevbulldozed into the market and effectively challenged and disrupted their duopolistic hold.

As competition gets tougher, Guinness has lost market share over the last five years, especially as younger alcohol drinkers shift towards spirits and cheaper beers. But Guinness has also increased market share in the spirit category exponentially with Orijin, among other brands.

International Breweries may have saturated the market with affordable and quality beers such as Hero, Trophy, Castle, Eagle Stout and more recently, Budweiser. But Guinness has not also been resting on its oars as Guinness Gold was introduced and is equally competing in the lager category.

For the beer war in Nigeria’s market to be meaningful and accurately captured in various industry and media reports, every datum and report from the players and allied sectors must be taken out of the speculation zone. The mystery surrounding the beer industry has to be demystified. Only then shall the real market leader emerge.