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It is a paradox of a kind. At a time many sectors of the economy are under-performing due to the global economic downturn and the debilitating ...

Brewery giants in Nigeria engage in fierce competition for the lion share of the market, in the face of inclement manufacturing environment

It is a paradox of a kind. At a time many sectors of the economy are under-performing due to the global economic downturn and the debilitating Nigerian operating environment, key brewery companies are awash with cash. The brewery giants are engaged in a fierce competition for the lion share of the industry said to have the greatest potential for growth in Africa.

Before now, Nigerian Breweries, NB, and Guinness Nigeria, the two dominant players in the sector, were engaged in a cut-throat competition for control of the nation’s beer market, but the entry of SABMiller, a global brewing giant with headquarters in London, in 2009, changed the face of the competition.

The sector has attracted huge foreign investments, which have enabled the companies to expand their capacity. For instance, Heineken acquired 54 per cent shareholding in NB in 2000 and subsequently invested more than $500 million (about N77.5 billion) in the company to raise its installed capacity, which is now said to be about 12 hectolitres. In 2003, NB acquired its sixth brewery at Ameke in Enugu State, which is one of the biggest in the country. Similarly, it acquired three more breweries in 2011 from its parent company Heineken.

Guinness Nigeria is not let out of the expansion rat race. Its parent company Diageo has spent over N40 billion to expand its Benin and Lagos breweries. It was, therefore, no surprise that in 2008, the Nigerian market for Guinness Stout overtook Ireland, the home country of Guinness, to become the company’s largest market after the United Kingdom, UK.

The consolidation in the industry, which followed the same pattern with the global beer market, is borne out of the competition for industry leadership. Though Guinness and NB are the main players in the beer market, there were, however, other fringe players like Sona Group, Consolidated Breweries, Benue Breweries, Life Breweries, Jos Breweries, International Breweries, Pabod Breweries, Dubic Breweries, Standard Breweries, among many others.

In 2004, Heineken increased its shareholding in Consolidated Breweries from 24 to 50.05 per cent. The Dutch company also bought five breweries from Sona Group, which it later sold to NB and Consolidated Breweries. Not done with consolidation, Heineken also bought Life Breweries. Diageo, the parent company of Guinness Nigeria, on the other hand bought Dubic Breweries for the production of low price beer.

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