Brewers’ Market Share to Change as Golden Guinea Returns

The market share structure of major brewers in Nigeria is about to change, particularly those controlling the Eastern States, following next month’s re-entry of Golden Guinea Breweries Plc and the re-introduction of its brand of drinks.

BusinessDay visited the brewery located on Aba Road, Afara Layout, Umuahia in Abia State for an on the spot assessment of various works ahead of its re-commissioning and products rollout anytime from August.

The Nigerian brewery industry is dominated by three brewing giants that are subsidiaries of key global brands – Nigerian Breweries (Subsidiary of Netherlands-based Heineken International), Guinness Nigeria (Subsidiary of Diageo, England), and SABMiller (Subsidiary of AB InBev, Belgium).

Nigeria boasts of youthful population and the growing middle-class, potent factors that are propelling growth in the country’s brewery industry. Each of the three brewing giants has numerous brands that compete for consumers’ patronage in the market.

Over the last five years, the brewery industry has revealed a somewhat zero-sum scenario as Nigerian Breweries (NB) continues to grow market share each year, while Guinness Plc (Guinness) records the opposite – a shrinking market share. SABMiller has however not relented in its effort to carve out a part of the market for itself in the increasingly competitive industry.

Interestingly, Golden Guinea Breweries Plc said its newly installed equipment has capacity of producing 48,000 bottles per hour which represents 1.15million bottles per day, saying it is twice the capacity of the old equipment which produced 24,000 bottles, and more than double that at Nigerian Breweries’ Ama, Enugu plant and SABMiller’s Intafact Beverages in Onitsha.

Nigeria’s beer market has been rated one of the 10 fastest growing beer markets in the world.

Nigerian Breweries has maintained its grip on the brewery sector in Nigeria, having grown its market share by close to 10 percentage points in 7 years as its market share rose from 62.96 percent in 2010 to 71.47 percent in 2016, according to report by Businessday Research & Intelligence Unit (BRIU).

The market share of Guinness dropped by 14 percentage points in 7 years, from 37.04 percent in 2010 to 23.23 percent in 2016. In an industry with an estimated turnover of N295billion, Guinness’ market loss appears to be NB’s gain as SABMiller mounts persistent challenge.

Until recently, when the world’s largest brewers AB Inbev made an inroad into the breweries sector with an intent to leverage its financial and technical strength and exploit its brand equity to drag market share, many had wondered whether the country’s brewery industry was heading towards a monopoly. The latest in the interesting challenge line this year is the re-entry of Golden Guinea Breweries Plc.

SABMiller has been performing relatively better since its advent into the Nigeria brewery sector in 2009, having shown doggedness to grab an increasing share of the market.
In 2012, its market share using International Breweries, the company with publicly available financial statement, as an indicator was 3.6 percent. This increased to 4.3 percent in 2013 and financial year 2014 and 2015 saw a marginal increase of 4.7 percent in 2014. Its market share further rose to 4.8 percent in 2015 and by 2016, it reached 5.3 percent.
Pan Marine Investments Limited is currently the core investors in Golden Guinea Breweries Plc which listed on the Nigerian Stock Exchange (NSE) on January 1, 1979.

At the Umuahia factory of Golden Guinea Breweries Plc, some of its “ready-to-use” equipment includes the Fermenting Plants, Bright Beer Tank (BBT) unit, two big Boilers, CO2 Plants, Mash Filter Units, the Grain Handling Plants, Weighing Scale, Hammer Mill and Roller Mill, the Polisher, Receiving Scale, and the Silos.
The implication is that from distribution networks to support services, there is new lease of life. For all the people BusinessDay interacted with around Aba road, trailer parks and truck loading bays, suppliers, contractors, engineers, plumbers, accountants, even food sellers, the good times are back.

“If you know Umuahia, you will understand what I am telling you. Golden Guinea is not just a company; it is the pride of the people of Umuahia, nay Abia State. It has been closed down for about 13 years and we are very happy that in a very short while, it will resume production,” a commercial driver who simply identified himself as Obi told BusinessDay.
“We can’t wait to drink ‘Oyoyo mmi’ which is an Igbo name the beer brand is known for,” he told BusinessDay.
The core investor assured that he will engage up to 10,000 direct and indirect staff majority of whom will source locally, creating positive impact on Nigeria’s labour market. “The good thing is that this is a private sector-led enterprise”.

Under a licensing agreement with Holsten Brauerei AG of Hamburg, Germany, Golden Guinea Breweries Plc produces and markets Golden Guinea Lager beer, Eagle Stout, Bergedorf Premium Lager and Bergedorf Malta.
“Despite dedicated power line, we are also constructing independent power to ensure uninterrupted power supply to the brewery,” another representative of the core investor who led BusinessDay round the factory said.

Golden Guinea was originally named Independence Brewery Limited. It started production in 1963 with an annual capacity of 1 million gallons. The company introduced Eagle Stout to the market in 1967 but between 1967 and 1970, further production was hampered by the Nigerian Civil War.
In 1971, the company changed its name to Golden Guinea Breweries and four years later, it was revamped and an extension built by the German firm Coutinho Caro which later participated in an equity offering issued by the firm. Golden Guinea Breweries plc is located in Afara Layout, Umuahia, Abia State.

However, production at the brewery was hampered by a fire incident in 2003 but recently efforts are at the final stage to bring the products back to their consumers. The company holds franchise rights to produce and market Golden Guinea Beer, Holsten Brewery’s Bergedorf premium lager beer and Bergedorf Malta in Nigeria.
The majority investor said the company’s share trade will resume at the Nigerian Stock Exchange (NSE) once it operations are fully balanced in the near future.
The core investors are now considering August 2018 relaunch of the products into the Nigerian market.

In addition to the efforts aimed at delivering arrays of Golden Guinea Breweries plc brands to the markets, the core investors told BusinessDay that they not ignorant of the positive impacts of the products quality, pricing and rebranding.
“Our distribution is not going to focus only on the Eastern States but we will be distributing our drinks across Nigeria. We must ensure our drinks are in Lagos and other States in the West, North, and Southern Nigeria while also consolidating our premier position in the East,” a representative of the core investors in Golden Guinea Breweries Plc told BusinessDay shortly after their board meeting at the factory premises in Umuahia.

As consumer goods companies are impacted by the macro-headwinds and a marked slow-down in consumer discretionary spend many analysts had expect Golden Guinea Breweries Plc strategy to be around pricing impacting on other brewing giants’ market share.
Nigerian Breweries remained the clear leader in beer in total volume sales terms in 2017. Its commanding lead was due to its ownership of well-established and popular local brands such as Star, Gulder, Goldberg, 33 Export and Life Continental.

Players focused on economy brands performed best in beer sales in 2017 as disposable incomes stagnated due to the sluggish economic recovery. The largest overall volume share gains were recorded by AB InBev subsidiaries Pabod Breweries and International Breweries with their respective brands Hero Lager and Trophy.
[Business day]

July 03, 2018