Demand For Beer To Intensify, As Competition Deepens

Ten years ago, Nigeria’s beer market had an estimated demand of 15 million hectolitres (hl) while population was put at 126 million by the International Monetary Fund, IMF. But as of today, demand is estimated at 23 million hl while population is estimated to be 167 million.

As population and demand growth persists, there is still an estimated gap of about 3 million hl in the industry. Our estimates based on growth for the past five years indicate that demand may be as high as 27 million hl by 2016.

The structure of the industry throws up issues regarding potential demand in the future and moves to meet the gap. According to a Vetiva Capital report on the industry, there is a possibility that market demand could be as high as 23 million hl in the next three years.

Indeed, in the next few years, the focus of analysts and industry stakeholders will be on the ongoing fierce competition for control of the market. As things stand today, there are four major players with Diageo and Heineken as the most active through their majority-controlled subsidiaries. They are Guinness Nigeria plc, Nigerian Breweries plc, and Consolidated Breweries.

The entrance of SABMiller in 2009 and its promise to invest $2.5 billion in Africa triggered sharp competition among the industry players and also gave the competitive platform a new look.

To gain entrance into the market, SABMiller, South African brewing giant, bought Pabod Breweries, Port Harcourt, where it owns 57 percent; Voltic Nigeria Limited (Voltic produces table water), Lagos, owns 80 percent of the company, and also bought Standard Breweries in Ibadan, Oyo State.

But in an apparent response to SABMiller’s entry into the Nigerian market, Heineken N.V., Nigerian Breweries plc’s parent company acquired Sona Breweries plc, Sango Ota, Ogun State; International Beer & Beverages Ind. Ltd., Kaduna State; Champion Breweries plc, Uyo, Akwa-Ibom State; Life Breweries Co. Ltd, Onitsha, Anambra State and Benue Brewery Ltd, Makurdi, Benue State.

Guinness Nigeria is not left out of the expansion race. Its parent company Diageo has spent over N40 billion to expand its Benin City and Lagos breweries.

Today, the Nigerian beer market is rated among the 10 growing beer markets in the world, with market share of 1.9 percent, which is slightly close to the Indian beer market that has 3.2 percent share of the market and occupies the seventh place in the ranking.