Economic hardship worsens brewers’ woes, sector records N255bn loss



…NB Plc shuts idle plants, Guinness, IBL introduce survival measures


Brewers in Nigeria are facing hard times as the nation’s economy continues to struggle amid rising inflation and shrinking consumers purchasing powers.

According to Business Hallmark’s findings, the three brewing giants that have so far declared their results recorded their worst performances in over 10 years.

The firms fared poorly in terms of profits accruable in the Year End 2023 owing to several factors, particularly, high operating costs and the sharp decline in sales caused by consumers shrinking disposable income.

According to the Full Year (FY) 2023 reports of the three major brewing companies operating in the country listed on the stock exchange, Guinness Nigeria Plc, Nigeria Breweries Plc and International Breweries Plc obtained by BH, the top brewers performed dismally in the period under review despite an upward review of the prices of the goods.

An analysis of the firms financial statements showed that the three companies recorded unprecedented pre-tax losses of N254.8 billion in the period under review, the worst record ever.

Further breakdown showed that the firms estimated sales volume declined by 5.0 per cent year-on-year to 18.9 million hectoliters (mhl) in 2023 despite the brewers effecting an upward review of the prices of their products.

However, the increases in the prices of products supported a moderate 12.0 per cent year-on-year expansion in the industry’s sales revenue, which jumped from N976.1 billion in 2022 to N1.1 trillion in 2023.

Analysis of the performance of the industry’s key cost elements (cost of goods sold, operating and financing cost) in 2023, showed that the three firms bottom line was negatively impacted.

For instance, the cost of goods sold, operating and financing cost rose 15.9 per cent year-on-year to N749.5 billion, the highest on record, outpacing revenue growth of 12.0 per cent.

Also, there was a 10.2 per cent and 3.1 per cent year-on-year spike in the brewers’ administrative, marketing and distribution costs to N80.9 billion and N198.6 billion, respectively. The finance cost accentuated 461.1 per cent year-on-year to N119.1 billion.

Owing to several factors, especially the impacts of negative exchange rate movement on foreign currency loans as well as tighter domestic and foreign interest rate environments, the brewers average leverage metric worsened to 0.71:1.00 from 0.43:1.00 in 2022.

NB Plc

Assessing the individually, the economic fortunes of NB Plc, producer of popular brands like Star Lager, Star Radler, Heineken, Guilder,, among others, slumped in the period under review. The brewer posted its biggest loss after tax since it began operations 77 years ago by recording a net loss of N106.3 billion in 2023.

According to a statement by the company, the poor performance was caused by a combination of challenging economic factors ranging from heightened operational costs, continued pressure on consumer disposable income, escalating inflation rates, FX volatility, amongst others.


All valiant efforts by NB Plc’s management to return to profitability, especially the decision to effect an upward review of its products prices by an estimated average of 25 per cent across brand segments in order to recover costs, failed to stop the slid.

In a bold response to a host of financial and operational difficulties the firm is currently experiencing, the beer-maker has embarked on a company-wide rejig of its operations.

According to a letter by the management of NB Plc to the the Nigerian Exchange Limited (NGX) seen by BH, the operational concerns include a record foreign exchange loss last year, which is leaving it with no option but to close down two of its nine plants.

The beer-maker said in the document that labour groups including the National Union of Food, Beverage and Tobacco Employees (NUFBTE) and the Food Beverage and Tobacco Senior Staff Association (FBTSSA) have been notified of the move to halt operations temporarily at the two plants.

“We recognize and regret the impact that the suspension of brewery operations in the two affected locations may have on our employees.

“We are committed to limiting the impact on people as far as possible and providing strong support and severance packages to all affected”, said the MD/CEO of NB Plc, Hans Essaadi.

With the shutting down of the two production plants, attention is expected to shift to the remaining seven plants with a view to putting their capacity to maximum use. BH findings also revealed that due to loss of income/revenue shortage, NB Plc have found it difficult to meet its loan repayment commitments.

In their quest to raise fresh capital for operational expenses, as well as meeting debt obligations, the cash-strapped brewer last week secured approval for a rights issue that will enable it source cash from shareholders in exchange for new shares.

Guinness Plc

Another industry player, Guinness Nigeria Plc, did not fare better, as it also suffered its biggest loss in more than ten years.

The brewer posted an after-tax loss of N61.7 billion for the nine-month period ended March 31, 2024 from a profit of N5.9 billion in the same period of 2023.

It, however, recorded a paltry 28 percent growth in revenue to N220.3 billion compared to N172.5 billion in the same period last year despite the increase in the prices of its products.

“Guinness’ performance for nine-month period ended March 31, 2024 (July 2023 to March 2024) was underwhelming.

“The company reported a loss-before-tax of N56 billion despite solid results on the topline.

“The topline growth was driven majorly by upward price adjustments as average product prices rose by 43 percent across the firm’s beer and mainstream spirit segments during the period”, FBNQuest analysts said in a statement.

Speaking on the development, the Managing Director/CEO of Guinness Nigeria Plc, Adebayo Alli, said that the current macroeconomic environment in the country will continue to present challenges.


He, however, said that he is confident in the resilience of his firm’s business and ability to navigate the volatility.

“Our focus remains steadfast on innovation, and stepping up operational excellence to meet our consumers’ evolving tastes and preferences.

“Furthermore, the company intensified its focus on consumer engagement and trade support, leveraging its digital platforms.

“Notably, categories such as non-alcoholic malt, ready-to-serve beverages, and international premium spirits witnessed substantial revenue growth, underscoring the effectiveness of these strategies”, he said. Guinness Nigeria had in March increase the prices of all its products, blaming it on rising cost of production.

“This new price structure will be effective from Wednesday, March 13, 2024, (Go-Live date) and further details will be communicated subsequently”, the company stated in a letter to its distributors.

The upward review affected products like Guinness Stout, Guinness FES, Guinness Smooth, Dubic Malt, Malta Guinness, Smirnoff Ice, Orijin, Orijin Bitters, Gordon’s Pink Berry, Gordon’s Sunset Orange, Gordon’s Moringa Citrus, Smirnoff X1 Smooth, Orijin Herbal Gin, Captain Morgan and others.

As a result, the price Guinness in relaxation joints climbed to N900, from the average of N600 in February 2024.

In the same vein, Big Stout now sells in the market for N1,000, compared to its retail price of N700 in March.

International Breweries Plc

Like Guinness and NB Plc, another brewing company that is facing hard times is International Breweries Plc, makers of Trophy Lager, Beta Malt, Budweiser, Castle Lager, Eagle, Hero and Grand Malt.

In its recently released FY 2023 audited financial statement, the company announced a loss before tax of N97.27billion and loss after tax of N70.03billion, despite posting a 19.2% revenue growth of N218.65billion compared to the N260.60billion it earned in 2022.

Guinness Plc was also weighed down by cost of sales, which climbed to N174.33 billion in 2023, compared to N145.08 billion spent in 2022.

Likewise, the top brewer declared N29.72 billion finance cost in 2023, representing an increase of 178 per cent from N10.68 billion in 2022, driven by N24.7 billion interest expense on borrowings in the year under review from N5.38billion reported in the corresponding year.


Business Hallmark findings revealed that though the travails of the brewery sector started a long time ago, it was compounded by the impacts of the economic policies of the present administration, which unified the exchange rates of the naira and removed fuel subsidy in 2023. The two policies, apart from worsening the already high inflationary trend, also eroded the purchasing powers of many Nigerian beer and beverage takers.

According to findings, the nation’s economy began to experience economic slowdown in 2014 owing to the fall in global oil prices and the mismanagement of the economy by succeeding administrations.


According to a development economist, Dr. Henry Akinbadejo, non-essential and luxury goods like beer and expensive alcoholic drinks are the first casualty as people start to cut cost and adjust to the loss of income.

“Beer and other alcoholic drinks are the kinds of discretionary goods that consumers in the developing world are quick to either buy when times are good or ditch when things get tough.

“Though, available data suggests that people tend to drink more when they are down or burdened, what happens is that they tend toward cheaper brands, when they can no longer afford the normally expensive popular brands”, Akinbadejo said.

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