Alcoholic drinks (spirits) producers are locked in a fierce battle of supremacy, amidst rising sales which have defied the general decline in consumer spending occasioned by the economic recession.
The intense battle of supremacy is reflected in the products segmentation and repackaging by producers, aimed at extending market reach in a bid to leverage on market growth.
Among other things, the growth experienced in the market is driven by the availability of the variety of alcoholic brands across different price range widening consumers’ choice.
The market also benefited from increased preference for spirits in smaller pack and plastic sizes offered to consumers at low prices.
Also, there is expansion opportunity offered by increasing urbanization and the rising number of female alcohol drinkers, especially in large cities, such as Lagos, Port Harcourt, and Abuja.
In addition to these is the country’s favorable demographics, with a populous and vibrant youth and growing middle class, are also contributing growth factors to the sector. Nigeria’s emerging young consumers are adopting consumption patterns similar to Western countries and are increasingly developing preferences for premium imported brands.
These favorable market scenarios encouraged various multinationals to strengthen their foothold in the market.
Vanguard Companies and Markets, C&M findings revealed that the multinationals are also attracted to the country by the absence of stringent policies or measures regarding production and marketing of alcohol in the country. Unlike what obtains in other countries, ‘Self-regulatory’ or drink responsibly is the common theme which brewers use in their campaign in Nigeria. These developments resulted to the heightened competition and quest for market share among major local alcoholic drinks producers and imported brands.
The local producers are Diageo, parent company of Guinness Nigeria Plc, which produces Johnny Walker, Smirnoff among others; Intercontinental Distillers Limited, IDL, makers of Eagle Schnapps, Chelsea Dry Gin, Squadron and others; Grand Oak Limited, marketers of the Lord’s Dry Gin, Regal Dry Gin and others, Euro Global Foods and Distillers Limited, producers of Sabrina, Braveheart, Amphora and others, all playing in the mass market.
The local brew, ‘Ogogoro’ is not left out in the battle for market share, as some locals still preferred the local brew, especially in the riverine areas of the country.
Also in competition are imported spirits and vodka brands including Hennessy, Remmy Martins, Chivas Regal, Martell, Jameson, Absolut, Jack Daniel.
Findings by C&M show that drinking is widely considered a part of social life in Nigeria; therefore on-trade outlets (i.e superstores) dominate alcoholic sales. Bulk of spirits and wine are sold through off-trade outlets (roadside), such as drinks’ specialists and independent grocery retailers since such products are mostly consumed at home or during parties and other social gatherings.
C&M also discovered that growing visibility and lower prices at modern retail outlets have helped off-trade grow faster than on-trade volume sales. The recession in 2016 and 2017, according to some distributors affected the performance of on-trade channels and boosted off-trade sales, since prices are generally cheaper through off-trade channels, even though consumers shifted purchases to smaller pack sizes, thereby increasing on-trade sales volume.
C&M findings also showed that majority of the purchases made by consumers were through the smaller pack sizes, aided by population growth – particularly young people and women, also helped the good performance of alcoholic drinks market.
Some of the alcoholic beverages are now linked with affluence and class/status symbol. Increase in purchasing power and aspirational spending habits have generated the demand for premium drinks.
Findings by C&M showed that the marketing communication materials deployed by some of the alcohol beverage brands portray these drinks as vitality enhancing beverage, thus attracting the increasing number of youth to consume them.
Speaking to C&M, consumers were divergent in their preference for the different alcoholic brands, with the majority preferring Smirnoff, Chelsea Dry Gin, Squadron, Sabrina and Lord’s Dry Gin. Consumers also showed a preference for foreign brands positioned as elitist brands, consumed at clubs, big bars, hotels and other high-class event centers, regardless of their prices. These brands according to the order of polarity and demand are; Hennessy, Remmy Martins, Jack Daniel, and Absolut. A consumer, Ellas Oludayo said he prefers Smirnoff because of its alcoholic content which he said is good for his body metabolism. “Its aroma, smoothness in the mouth and its hotness from the throat to the stomach endeared it to me”, he said. Kingsley Igbonekwu, a consumer, also said he prefers Smirnoff because of the name behind the brand. “I see Smirnoff as a trusted brand. I also take Smirnoff when I feel like lifting my soul “, he said.
Distributors were optimistic that the alcoholic drinks market is expected to perform better in 2018. A distributor and Managing Director, Heavyman Enterprises, Fidelis Anokwuru, said: ”Alcoholic drinks are expected to see much-improved volume sales in 2018, as the various categories recovered from the relatively weak performance seen in 2016 and 2017 caused by the economic recession. The economy is expected to recover in 2018 although it may not be as fast due to the recent rise in global oil prices.”
Another distributor at Oke-Arin market, Lagos Island, who pleaded anonymity confirmed that Smirnoff, Chelsea Dry Gin, and Squadron are doing creditably well in his sales book. Retail sellers of imported drinks said Hennessy, Remmy Martins, Jack Daniel are also doing well despite their high prices.
Culled from Vanguard Nigeria