Nigerian Breweries PLC

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\Content

  • Company Overview

  • Business Model Canvas

  • Recommendations

  • ERRC/Recommendation Summary

| Company Overview

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Nigerian Breweries offers high quality beverages mainly beer and malt products with 99% of its current sales coming from Nigeria where it has

the biggest market share.
Nigeria is also the second
most lucrative beer market

in the
world in 2020.

 

Market Share of Beer Companies in Nigeria in 2019 from: Inside Beer

Source: Statista; Population Growth in Nigeria (in Millions)
 

Over the years, Nigerian Breweries’ profitability together with the other players in the industry both in Nigeria and of the entire Africa has been under pressure due to the volatility of macroeconomic factors.

 

Nigeria has a yearly population growth of 2% each year and is comprised of 77.4% of individuals who are under the age of 35. Its population is also comprised of Muslims by 50% - which greatly affects the general population’s preference on alcoholic beverages.

 

Source: Statista; Net Profit (in Millions - NGN currency)

| Business Model Canvas

Click image for full view

Click image for full view

 | Recommendations

The recommendations given are a mix of short and long-term recommendations, where short term in this case is defined as to be implemented strategies in the near future or within the year. While the long term is something to be considered in the next coming years as it will involve much bigger efforts and expected impacts.

 

Short-term Recommendation 1 : Increase varieties of non-alcoholic Sorghum-based beverage products.

Source: World Bank ; Contribution of agriculture to GDP in Nigeria from the 3rd quarter of 2019 to the 4th quarter of 2020
 

Short-term Recommendation 2: Activate online channels – a D2C service.

The young population (age below 35) in Nigeria has been increasing along with the country’s overall 2% population growth. This market is seen to increase its internet usage by 65% in 2025. Although the company has been implementing online marketing initiatives, the channels as to which they have their products reach the customers are “traditional”.  Having an interactive online presence and providing a Direct-to-Customer channel may help the company have a stronger consumer knowledge and establish deeper relationships with them. From this, Nigerian Breweries’ strategies and branding will also be able to adapt easily to the ever-changing tastes, preferences and demands of the market. This could lessen the threat on the company from big international companies taking over their market share and targets for expansion.

 

Source: Statista; Number of internet users in India from 2015 to 2020 with a forecast until 2025 (in millions)

From a regression performed (refer to Bivariant Regression in Excel), there is an 84% chance of increase in Revenue for every change in Number of Beverage Varieties. This then leads us to the recommendation of increasing the varieties specifically on Sorghum-based non-alcoholic beverages, in order to take advantage of the opportunity in capturing the Muslim market who make up 50% of the country’s population. Making these additional varieties Sorghum-based will also support the country’s agricultural product - Sorghum thus helping its Agricultural sector. In the long run the initiative should contribute to sustaining Nigeria’s economic growth, as the Agriculture sector takes the biggest percentage of the country’s GDP. Helping the economy in this way will widen the current market as more consumers are able to afford Nigerian Breweries’ products. Nigerian Breweries will not only increase its revenue but will have an even better image as being both inclusive and sustainable.

 

Source: Statista; Number of internet users in India from 2015 to 2020 with a forecast until 2025 (in millions)
 

Long-term Recommendation 3:  Expand export to India.

 

As Nigerian Breweries gain more competitive advantage on the Nigerian market that is comprised of Millennials (age 25-40) and Generation Z (age 9-24), they may also use their customer knowledge and strategies to target the same customer age groups in India - which has a 66.4% of its total population belonging in the working class (age 15-65). Given that Nigerian Breweries will push forward to creating interactive customer presence and services online, it can take advantage of the increasing trend of internet users in India with a 40% forecasted increase from year 2020 to 2025.

Besides the market advantage that the company has with India’s population and their past and forecasted trends, India itself has a great potential in its Beer industry as it has not been maximized yet - meaning the industry has not matured in this country and is still far from being saturated with numerous competitors. It also shows a predicted yearly beer consumption growth of 10.4% from 2021 to 2025.

Summary of Recommendations

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