Unsurprisingly, the performance of brewers in 2019 was driven by developments in the competitive landscape. The intense competition, especially from International Breweries Plc (INTBREW), created no room for other players to increase prices and pass on the impact of the graduated excise duty to consumers, which grew further in Jun-19. This was as INTBREW continued to flood the market with its regional and international premium beer brands, Trophy lager and Budweiser while undercutting competitors’ market share.
However, Nigerian Breweries Plc (NB) was able to wrestle back some lost market share in H2-19 as it rolled-back on previous product price increments and embarked on a massive advertisement campaign around Heineken, Star, and Maltina brands. Also, the rollout of Tiger brand late Q3-19 supported NB’s topline growth. However, Guinness Nigeria Plc (GUINNESS) suffered the most, losing the beer market share to the other two players while focusing on growing its high yielding Spirits segment.
In 2020, we believe the competitive landscape for the domestic brewers will remain challenging. Specifically, we expect all three key players to continue their battle for market share. However, pressures on the cost line would remain a peculiar concern for INTBREW despite expected improvement in finance costs post-rights issue.
Meanwhile, GUINNESS’ performance may be supported by its growing Spirits line, but this may not be enough to boost top and bottom-line growth, especially as excise duty on Spirits is scheduled to graduate further in 2020.
UNITED CAPITAL RESEARCH