Economic Strain Forces Many Nigerians to Forego Beer, Reveals Nigerian Breweries CEO
By: Emmanuel Ibitoye
In a stark revelation, the Chief Executive Officer of Nigerian Breweries Plc, Hans Essaadi, highlighted the severe economic challenges faced by Nigerians, stating that many citizens can no longer afford to purchase beer. Essaadi made this statement during the company’s investor call following the release of its 2023 results.
The economic downturn in Nigeria was underscored by a significant decline in the mainstream lager market, attributed to consumers being unable to afford beer, as expressed by Essaadi. The challenging economic environment was further emphasized by a N153 billion foreign exchange loss incurred by Nigerian Breweries due to the devaluation of the naira for the year ending December 2023.
Despite growing its revenue by 8.9% to N599.64 billion and experiencing a positive price mix, Nigerian Breweries faced headwinds. Net finance expense rose by 449.7%, leading to a loss of N106.31 billion compared to a gain of N13.19 billion in 2022. The company navigated a tumultuous business landscape marked by a redesigned naira, cash shortages, high inflation rates, fuel subsidy removal, naira devaluation, and foreign exchange scarcity.
The board acknowledged the challenging environment but expressed readiness to leverage its 77 years of experience in Nigeria to weather the macroeconomic headwinds. Despite a net loss, the company aims to be resilient and forward-thinking, utilizing its portfolio, supply chain footprint, and dedicated workforce for long-term value creation.
Notably, Nigerian Breweries had adjusted product prices upward in August to accommodate rising input costs, reflecting the broader economic challenges faced by businesses in Nigeria. The Central Bank of Nigeria’s actions in harmonizing the foreign currency market segments in June 2023 contributed to the naira’s devaluation, impacting various companies with forex losses. The banking sector, however, fared better with FX revaluation gains.
